Transcripts For CNBC Squawk On The Street 20140506

Ipo, insiders with a chance to sell after the lockup expires. The stock down almost 40 this year. Can we make a crossborder deal . Germanys buyer acquiring mercks consumer business. The president of france throws a wrench or tries to in ges plan to try to buy alstom. Can hollande convince ge to sweeten the offer . Apple trading above 600 since 2012, push for upgrades, new products incoming, are we in for a sweet spot for apple shares . A crucial morts for general moto motors. Another engineer exits. Jim says now is the time to buy. It has been a long road for shares of apple. The stock closele above the 600 mark since october of 2012, comes two weeks after apple announced the seven for one stock split, better than expected numbers and expansion of the Buyback Program from 60 billion to 90 billion. The low, 388. The high 702. Closer to the 702 at 600. I think that tim cook listed on to carl icahn, he listed on to a lot of things a lot of people were saying and distilled it and recognized its not just the buyback. Its the opportunistic, thats the word he uses, opportunistic buybacks. You see a lot of stupid buybacks. When theres a lot of supply, the apple buyback is in. They are not in there just kind of oh, lets do 100,000 a day. They are being positioned, they are sopping up supply. This is the kind of genius buyback that a lot of execs should Pay Attention to. Because most of them just do this desle terrorry buying. No. Think about it. Cook is. Right. Theyre buying more stock than has ever been bought by a company in history because they have the largest market cap and cash of any company, almost all of it, most of it overseas, theyre borrowing here to actually fund the buyback. That will continue. The bigger question, what do you got for me now in terms of new products. Theres a person who starts there today, aaron, from burberry. I want you to go to salesforce. Coms website and see what arent did when at burberry. The presentations, the way the excitement. The Retail Stores for apple were not a bright spot this quarter. This person, this former ceo, has probably the best Digital Strategy ive ever seen for retail. Im talking about what has apple lacked . Its lacked pizazz. You get new product, pretty much weve been hearing that from tim cook and the best salesperson on earth who understands digital. That explains a lot of the stock. Theyre paying her 113,000 rsus to come over, priced at 600, thats 68 presplit. 68 million over the next four years as she begins shes already started in cooper tino. The journal heard on the street looks at the Stock Pattern between q2 earnings and the launch of a phone in the fall and on average last few years up 16 . Buy in may and go away. It really is an extraordinary thing to have apple on its game, and both financially and i believe new product, but most important, we have you know, when you look at apple and go to the stores, you know, the stores, theyre okay. Do you remember when the Stores Opened how exciting it was. Very exciting. Look for excitement, but it will be on your handheld. Your handheld will just its going to explode. Its going to have will it become a pyramid made of glass and i can walk into and buy something from . They will have neat pyrotechnics. I see. You will be excited. Youll walk in the store, they will know. It will be starbucks like in terms of you know what they want. I urge people to go to the sales force presentation. Because ahrendts is a marketer like no other in terms of the digital world. Lets not forget still trades at a low multiple, buying back a lot of stock, and this is a market where that is being not necessarily the buyback but lower multiple stocks are performing better than their higher multiple brethren which could take us to twitter. Maybe, you know, look dont forget, i mean carl icahn is still loving it. A lot of people thought he would sell. Nope. Hes not selling. That matters to me. That was on scott wapner. I said that stock is going to roll because hes not out there selling. People who are selling is the question for twitter. The lockup period for hundreds of millions of shares held by insiders has expired and now eligible for sale as of the open this morning. It was six months ago twitter priced its ipo at 26 a share and we asked dick costolo about that indicating he and cofounders jack dorsey and Evan Williams had to plans to sell their shares and who else might be on board . Benchmark one of our early investors announced they have no plans to sell and frankly, after speaking with most of our major investors that were with the Company Since prior to the ipo, many of those investors have declared that they have no intention to sell. We feel great about that. Its frankly one of the reasons, probably the primary reason well, have decided and announced we wouldnt we have no current plans to have a secondary offering. I think back to zuckerberg who actually gave a time period. He said i wont sell until september. I forget of which year. We tried to get costolo to bite on that. All he would say is no current plans. Look, lets cut to the chase here. Theres so many individuals who have low basis and its not a question of wanting to sell. Its a question of some executives saying look, our stock is undervalued at a certain price and if it gets to x you know what, im a buyer, not a seller. The way to be able to stop Insider Selling is to turn buyer. After six months, remember, the rules are you can even if you sold, you can buy it back. Right. 16b3. I think this is going to be under pressure. Theres lots of i believe desks positioning, meaning their banging the stock down short to cover, thats allowed, to be able to cover on Insider Selling and look, it wasnt like the company delivered a fantastic quarter. The doovers here, yesterday was the kind of the amazon deal, we get another 30, 40 deals like that and next thing you know you have a stock or if you get user growth metrics that start to really show Significant Growth yet again. Which we didnt have. Year over year you may create more demand for the shares to which they could sell without crushing the stock. Whenever you see Monthly Average users over timeline, new metrics, new metrics means sell. Theres this old metric that i keep falling back to, its called earnings per share. I dont totally out of snishgs never heard of it. You have to qualify that. Talking gap earnings. Talking gap, then youre really before stock issued execs. Amazon, then youre xing out a number of companies. Well, i think that there are a number of companies in 2000 that if you as striked them and knew what the real earnings were i like Free Cash Flow. A great measure. Its coming to me. Free cash flow and look at cash position. Some of the companies are doing quite well. Enterprise value, theyre too high. Its not catastrophic. Theres a lot of bubble articles in the times, david leanhart. Where was he february 26th when the bubble popped. The first week of march when the plug power bowers popped. You have the speculative single digit players popped, you have the sales force. Com being the gateway february 28th Conference Call where the stock goes 68 and then to 58 and dont look now. And that it popped. Maybe if hes charters, the head and shoulders pattern are hideous. Im not going to come down and say a stock down 45 like Tablet Software symbol data is a screaming short. I just cant do it. It wasnt screaming short when at 102. 52, 55, screaming short, i dont know. I like them higher to short, not lower. Right. Athena still high. I get that. Im thinking einhorn. You and i thinki ing einhorn at that time. Im giving you a green light to that thought. He would say theres plenty of stocks throughout, 3 billion market cap should be 300 million. I think that the one hes after, somehow i was linked to it, which bothered me, i was saying sell the high mult. S, wasnt a cloud stock, im easily trashed, i think you dont want to own the cloud stocks on any lift. If you take a look, this is the cost level among longs today. They need this higher. Youll see a pattern of a drop of say 6, 8 and a flip of 2 and sellers come back. This has been a pattern for four different moves. Can that be broken. I dont know. I dont know if its a bubble in m a and prices being paid are awfully high. Merck one example, agreeing to sell its Consumer Care business to bayer for 14. 2 billion. That makes the company the second largest overthecounter drugmaker after johnson johnson. Brands including claritin and yaf trin and dr. Scholls and coppertone. An interview with mercks ceo ken frazier later this morning on squawk on the street. Jim, you and i have been talking about this. We mentioned it yesterday. I know a number of bankers who had the competing bid that was well below the winning bid. Well below. When i look at the metrics here, 21 times ebitda, 2. 2 billion in sales, selling for 14. 2 billion. Yes, there are significant synergies that they are citing here. See some of them. 200 million a year in cost synergies. There was theres even more than that as well. But, you know, not off the bat but this price this price is enormous. When merck bought scheringplough for 41 billion five years ago a sense that this division, dr. Shols, coppertone might have been worth 3, 4 billion. When i spoke to fred, the retiring ceo, he said merck is really buying this company for our drugs, the pipeline. Well, 41 billion, 3 billion in synergies the first year, another 15 here. Maybe the merck deal which a lot felt was a mistake wasnt so dumb afterward. At 14. 2 i have to say that was well above what people were expecting when the auction began, which is some time back already. And you can i mean 21 years of ebitda is a lot. Take that number down when you include some of the synergies they expect to get. Thats a big number. A lot of these products are under tremendous from parago from private label and i dont think the Consumer Product section is worth as much as buyers paying. Buyer clearly knows its for merck, of course, which says its going to put some of the money into obviously Drug Development in particular, this melanoma lung cancer therapy. Hepc. Frazier regarded as a bit tepid ceo has come on, i think hes done a great job in the last six months. Since the stock was at 46. 47 put his money where his mouth is and started buying shares. Buyers talking about revenue synergies. We didnt include that of about 400 million by 2017. Ken coming on . Phraser from merck. Interesting to talk to him. Sensational. So much to ask. They hit it out of the park with the number they got. They did. Theyre talking about msd, im sorry putting money into the mk 3475 which is an investigational antipd 1 immune no therapy in patient with advanced melanoma and small cell lung cancer. Sherring has a remarkable bipolar drug merck was supposed to develop because it doesnt have weight. Were not seeing that yet. Merck has a full plate, lot of 400, 500 million drugs. Single and double hitter. Theyre jeter. Okay. They are not a swing for the fences company and there are a lot of singles and doubles in that sherring pipeline being split. He has hit a couple home runs. What thats not Jimmy Rollins . No omar quintanilla. No. Nobody can really replace quintanilla. We lost playing in miami. We managed to lose last fight. Did you catch this . Were not supposed to diverge. When we come back cramer says this is one of the crucial moments when it comes to gm. Find out what hes talking about and what it might mean for the stock. Luxury retail giant on cnbcs first 25 list of the most influential Business Leaders in the past quarter century, Bernard Arnault will join us live from paris. One more look at futures. Another turnaround tuesday as they call it . Well have to wait and see. More squawk on the street from post nine in a moment. St nine i man speaking jananese its called truecar. And truecar users. Save time and money. So when youre. Ready to buy a car, make sure you. Never overpay. Visit truecar. Com today. Improving everything from booking to baggage claim. Were raising the bar on flying and tomorrow well raise it yet again. As much as gm keeps getting hit with bad press, including a brand new recall Just Announced today for 52,000 suvs with flawed fuel gauge software, as much as the media seems to be eating these guys alive and as much as today we have a highprofile resignation of the engineer involved in the original recall, i think this is one of those crucial moments you have to be a buyer, not a seller. Thats right. Im telling you to buy General Motors right into the teeth of this recall controversy. Jim cramer on mad money last night. One of the reasons 3. 5 yield you call notoriously b. I. G. Indeed. I dont want to make light of the tragedies of the terrible deaths that have been caused by this, but this recommendation based on two things you saw on cnbc. One is kyle bass empirical work on the accidents that occurred and your interview. The second was a little known i felt not concentrated on snippet from warren buffet when becky talked about gm where he said that barra could run any of his companies, he thinks the world of her, theyre talking about 5 in earnings power no incentives this quarter, ahead of in europe to ford, gm business very, very strong. This is a company that people have decided is going to be bp and its not going to get bp. Also, one of the big three, one that beat expectations on march sales. 6 . I mean geez, you look at this company and think, shouldnt they have had sales down 10 . Theyre offering some incentives today but the one i look at General Motors, i think to myself, heres a company that has had the worst Headline News in this era and its still ticking. More than ticking. I mean its only 6 bucks below it 52week high. Remember how bad when toyota had that problem. Sales plummeted. Sales should have plummeted and didnt. Maybe sometimes what doesnt happen is a chairen call. Well get cramers mad dash, count down to the opening bell and one look at the premarket on this tuesday. More squawk on the street live from the nyse straight ahead. [ 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. In todays market, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price, maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Tuesday, about eight minutes to go before we open trading on this tuesday. Time for our mad dash. When i think eog i think jim cramer. Thank you. This is a stock you have talked about numerous times on mad money and also right here. Its been my favorite. Mark pap retired ceo, set a pace of 40 growth. David, when we talk about these cloud and software as a Service Companies, some of them are averaging 35, 40 growth. Tabblo 80 . I should have said that. Eog, kind of fooled a lot of people. Stands for enron oil and gas, but it hasnt been that in so long so people dont understand. Permian, theyve got the delaware basin. Looks like thats going to be the third leg of a threelegged stool. Best assets. 3,000 Barrels Per Day in eagleford and bakken, ramping spending. People thought they were going to ignore bakken, so much more, bakken being north dakota, in texas. Its a remarkable story. What have we heard that has the stock up over 4 . One of those where they released the results and then do the Conference Call. The results, mpap was not a showman. The new ceo, eog reports outstanding results. Some people who are critical. Thats the way that pioneer does it. Enron oil and gas, eog is the best. Return of capital in the Airline Industry, amazingly enough is now a story weve been talking about for a while and its happening. Again and again. We talked all of our lives, david, about cost. The whole idea hard to imagine theyre talking about a dividend boost of 50 . Returning 2. 75 billion. Talking about cash machines. Now theres a lot of people saying wait a second which industry . This is the airline say that again. The airline. The Airline Industry a cash machine. Branson talking about how there could be more competition examining because amr, american airlines, has to divest. Thats Justice Department. We know frontier is starting to fly from different places. Brian sullivan lives near trenton, starting to fly to milwaukee. How nice for him. And thats what im going tore. Just these what youre starting to break down the competition is coming, that trenton to milwaukee line, says stay long delta. American is my favorite incredible american incredible contributed to david tepper being able to make over 3 billion last year, given his large ownership in the debt of american. Incredible what happened there. But obviously delta, 112 rise. They bought the refinery, theyve got great labor relations. At least the company says that. But doug parker at american, still my favorite as much as i like delta. Just because the possibility of a 6 number there for earnings power is very much here and i think that stock goes to, are you ready . 60. Amr. 60. Yes. Whole idea of capital return in this industry is still something im not getting my head around. Im not backing away. Cost of capital never theyve always had to compete, but the antitrust the protrust division of the Justice Department lets them i saw attorney general holder this week. Used to jab him about that. Having solvent air carriers is not a bad thing. The opening bell about five minutes from now. Were back with more squawk on the street after this. Reet af. The state of Luxury Retail, their interview with one of the Global Leaders of top notch brand. Brand. Squawk on the str at your ford dealer think . They think about tires. And what theyve been through lately. Polar vortexes, road construction, and gaping potholes. So with all that behind you, you might want to make sure youre safe and in control. Ford technicians are ready to find the right tires for your vehicle. Get up to 120 in mailin 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. [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Youre watching squawk on the street live from the Financial Capital of the world. The opening bell set to ring in about 90 seconds or so. Got to keep your eye on twitter today as the lockup expires. Looking back, april 29th, guys, just a week and a half ago, a 43 stock. Were now at 35. 70 in the premarket. You know, look, they delivered a quarter that everybody loved. If they had done the quarter that costello did when you were interviewing him people would feel more confident. This is one of the stocks weve seen over and over again, the secondaries, the Insider Selling and all of the softwares Service Companies and Cloud Service have been monumental. Back to tablo the stock up the most, ran from 6 to 102 and then february 4th put reported a good quarter, went up 13 , and then next thing you know they did a 4 million shares secondary at 89. 35 and never looked back. Insider selling kills. It kills. Safety takes a vacation when Insider Selling. Safety typically never takes a vacation. Absolutely. We mentioned jpmorgan at the open yesterday, warning about trading revenues. Barclays turn, decline in revenue as they missed estimates. Q1 pretax profit down 5. I had me one last night. At one point i liked the bank stocks. I blame myself. I cant blame moynihan and bank of america. I blame myself. The 20 decline in jpmorgan, i blame myself. I actually believed that you could have good quarters if you were in the big banks. Barclays also suffering a number of significant defections from its Investment Bank. A lot of the exlehman bankers that barclays have departed or will be departing in the near term. Interesting to watch whats going on at that Financial Services company. You pointed out last week that was kind of a black hole. Its funny the one thats really doing best right now is royal bank of scotland and that one had big oh, boy. Its been its time in the wilderness. Is that a polite way to put it . They bought the they did the big deal that got them into so much trouble. Thank you very much. Ges. Like that ad. Royal bank of scotland that that was genius. Thank you so much. Oh, boy. That was stupid. Wow. Keep our eye on apple closing above 600 yesterday for the First Time Since october 2012. We mentioned angela arent and the bonus signing. Greg stein livle who will get up to 55 million for leaving the company for compensation. I know. People were saying, how did target do that . People negotiate contracts. And you dont theres a lot of compensation issues. One of the things that was so great about beckys interview yesterday, like to harken back to that, so much good stuff, munger was talking about it, when you make these pay packages public, what happens is the Compensation Committee looks at the other packages and gives people these unbelievable packages. So that was a prenegotiated. Dont think they said listen, we love you, heres a big check. It was like we negotiated with you so we have to pay you. Much more along those lines. Aig one of the big losers down more than 2 . Beats by 14 cents at 1. 21. Revenues amiss. Premiums down. Disaster losses up year over year. No incremental new buyback news. Yesp. Catastrophe not that good. Frankly, this is the Second Quarter thats disappointed. Theres a guy at bernstein who loves this stock will be out there, but i do think that two quarters in a row that the company has disappointed is going to matter. I think it will matter. Shares of directv are actually up this morning, about 1 . Now the company will not hold its Conference Call as it typically does until the afternoon. It looked okay. The revenue number was fairly good. There was i talked to a couple guys this morning that point out that sub net subgrowth was light. 12,000. There had been expectations for a bit more than that. Were not talking about a lot here obviously. But overall the stock is reacting positively. Well see what, if anything, they say when asked about questions of consolidation. Again, just to take you back to last week, the reporting by the journal, which i was able to confirm as well, yes, an approach was made about a month ago. There were some conversations. But very much unclear whether theres anything really going on there between directv and at t or anyone else. Still to be heard from, of course, is dish. Right. David, i like when i think about companies, i like cash flow. I like Free Cash Flow. Mimicking you entirely from just 17 minutes ago. Yes. The Free Cash Flow here is kind of amazing. 710 to a million to 886. Cash flow before interest taxes. A term by the way that you introduced to the air was extraordinary. I think a lot of people just say, geez, this Company Makes a lot of money. They do. Theyve got a whole thing here on venezuela and a currency update. Some who say thats still an issue for them in terms of where theyre valuing the Revenue Streams. And for ford right. Ford shut down for 15 days. Us but looks really does it not amazing these is it not amazing these companies have not abandoned venezuela. When you look at the Consumer Products company. Then three cent hit from venezuela. The three cent hit from venezuela. And venezuela is a country that is very wealthy, that is poorly managed. People are saying one day the revolution will come. Thats a capitalist revolution. You need chile, you need pinochet, yes. Lived in caracas as a kid for a year. Crazy town. We think we have an income polarization problem. Unbelievable. And peter shay obviously reviled by the left, but chile joined the joined the nation the world of commerce. Right. After pinochet came in, brought the university of chicago people. Much better managing the economy than playing football. Odp . Go ahead. I mean its up 11 . Closing 400 stores. One in five u. S. Stores. They close every store, where does the stock go . You have to wonder. I know. Ive been waiting for this for ages. The rationalization of office depot. Remember, rite aid rationalized and look at that stock. This is a challenged segment. When i see walmart having faster growth than amazon, i always think Office Supplies have been something thats been footballed around. Any rationalization of this business will help staples too. Staples has been in a world of hurt house of pain. In this case, the deal may be making sense, Office Depots look, i think that it took a little time, you had to figure out where the overlap was. That stock can have a little bit of a run here. Beyond what its had. Discovery communications have been done as much as 3 this morning. The company reporting earnings as well. Affiliate fees did not grow quite as fast as i think there had been some expectations. Revenues up 22 . Adjusted operating income before depreciation and amortization. Perhaps a disappointment with affiliate fees. Did repurchase 3. 4 million shares. During of the course of the quarter. Free cash flow, 213 million for the First Quarter. International business primarily due to increased operating performance, lower tax payments deeshgs cline in losses from derivatives. Derivatives . Why it was up so much from a rear year ago. Dont like to hear derivatives in any Earnings Report having to do with any company not doing financing. I want to hear deadliest catch frozen earth. International mar margins. Disney after the quarter. Frozen and chewbacca. Were six months away eight months away from the year that star wars will dominate. Franchise after franchise and remarkable job. The stock was up very big after it reported last time. The previous time it got hammered. So i mean people are trying to gain disney. Remember it went over and above last time. Bob iger loves to buyback stock in a targeted way not unlike the way tim cook buys. Not the only one tonight. Whole foods, electronics arts, pot belly, fireeye, one of your favorite names, at least to talk about. Fireeye. Fireeye has been, you know, use that the fire in the eye of the tiger. Now its got the eye of like i dont know, maybe a pussycat. Whole foods does have a lot of price competition. Couple notes saying be careful and the notes seem cogent to me. Fireeye, yeah, having another bad day there. Sharp stick in the eye. You mentioned Athena Health, down 12 . You mentioned einhorns comments. Excellent company that could fall 80 . Its cloud but not really cloud. Its medical records. It should maybe have never gotten all the way up that it did. Now its in freefall. When a guy comes out remember the Green Mountain coffee presentation, theres people who give presentations that are negative and they tend to resonate far more than the positives. They do. It was a speaking of our colleague scott wapner there telling me peppered with video of mr. Bush, the ceo, of Athena Health and sort of at his expense. I would point out last year, the people who appeared last year, when you look at it, performed terribly vers sus the rest of the market. Well underperformed the market the s p it itself. So take it for what its worth. The stock has been a down stock and bush has done a lot of interesting stuff about the health guide, not recommending i dont know how i got caught up in this thing. The last two quarters were not what i wanted to see. This is part of the lets embrace the cloud, im kind of hanging on to the cloud, get off my cloud, the idea that this is a cloud stock, ive always felt was a little maybe a little too stretched. The stretch, partly cloudy. Its partly cloudy. Chance of meatballs coming at you with that stock. Dow is down 62 early on and bob pisani is on the floor. Hey, bob. Good morning. Happy tuesday. Best trading day of the week by the way is art cashin likes to point out. Starting largely because the financials are weak not just here but europe. Barclay, deutsch bank, credit suisse. Barclay said the same thing jpmorgan said. Trading revenues down 41 in the First Quarter. Second quarter isnt going to look much better. Challenging trading conditions resulting in subdued client activity. I love that line. What does that mean . Is this a cyclical or structural sflob looks cyclical. For the moment traders cant make money trading fixed income. Dont have a lot of events to drive the volume. Remember we have the dodd frank act, capital restrictions going on in the u. S. And overseas. The basil rules. Thats a structural issue. This could be a longterm problem as well. Remember its that area the proprietary trading books that was a Growth Engine in the past. Meantime see the options business. Cboe had a great report. Doubledigit increases, record revenue in earnings thank goodness for the vix. That product is the gift that keeps on giving. Vix volatility products keeps growing and growing. People want more protection all the time. Cboe down fractionally. Twitter, okay. I know the lockup has expired and everybody said were big shareholders not going to sell. I dont care what anybody says. It went public at 26. Its in the mid 30s. Heres all you need to know. The average insider price, average cost for all insiders for twitter is 2. 21. 2. 21. Its at 35. Think somebody is not going to sell here . I think so. Thats normal mathematics here. Speaking of the ipo market theres a little bit of a thaw happening. I am interested to see this. Overnight, market file, thats the big Financial Data company, true car, car pricing website, and zendesk, cloudbased Customer Service software, thats tech and we have tech filings now. Remember i said last week, it all dried up. Theyre starting to trickle back. Everybody is obsessed with alibaba. Were waiting for that. Im more interested these guys are testing the waters right now, not happening today. It will probably everything will happen probably next week. This week theres going to be a whole bunch of other kinds of ipos. Nine ipos are going to try to price this week. The test is wednesday night, five will price. Cheetah mobile, chinese mobile app trying to price, Liquified Natural Gas player, gas log thats out there. The market, this is going to be very big because were littered with broken ipos this year. Take a look at the number of broken ipos. 44 of all ipos have are trading below their initial price right now. And 36 of all ipos priced below their range. David, in the last of the last 20 ipos. 75 have priced below their range. So this is a big week. Now theyre trying to push through nine of them. Well see how many price in the mid point or in the area below. If you get a lot of them, all of them pricing at the mid point, i would call that david a big victory for ipos. Well see. As jims pointed out. Dont buy the first trade. Bob, thank you. Only eight. Doing a favor report here. Going to Rick Santelli. There is a long deck so to speak, the slides and Things Companies it inically put out, i think astrazeneca would love you to look through. The company and board publishing a presentation updating on the continued progress and executing its strategy on achieving scientific leadership. Strengthening its growigrowin growing platforms and returning to growth. They are talking about the momentum they have in terms of drugs, under development. Used the word momentum. As they continue to put up right now put up the heisman to pfizer and its attempt to buy this company. They say from 2017 to 2023, astrazeneca, targeting strong consistent Revenue Growth, theyre going to have revenues of 45 billion by 2023. 20123 . 2023 . Nineyear plan. Momentum going into 20 they put out a press release, a very long slide presentation that if youre interested in this deal you should be looking at. I will send to you, of course, jim, because please do. You were questioning. I was critical. Questioning their pipe line. Others with better cancer pipeline stew theyre talking about this didnt take a shot at me . No, they did not. Good. Its important i ask. Strongly positioned to combine agents within key scientific mechanisms. All going to the basic thesis that no, we have a lot of momentum in latestage pipeline. Were going to be presenting some of the stuff coming up. All the different meetings that will be taking place in the near term. I think san diego, you got the a ats, and the ada in san francisco, june 13th through 17th. So, astrazeneca continuing to fight off pfizer. Well see where pfizer goes next, of course, and it ace tempts to acquire it, but as ive said previously, time is of the essence here in the sense of pfizer doesnt want this tax thing to keep hanging out there as a pinata potentially you could get congress to start to act on. Postcease demaio. That would be in two days. There will be more ocho de mayo. Back to m a and the transaction this morning, the consumer business from merck being sold to bayer. I mentioned what a high price that is, 21 times ebitda, significant multiple to sales. Weve been starting to see and hearing from bankers, numbers, you know, covered bids below the number that won the auction. For example, excel lon and pep. Co. Remember that. What does that have with the valeant deal and other things. Going to the bond market to worry. Take a look at the compression of spreads between high yields and treasuries and the ability of these companies to borrow and why that may be leading to very high numbers . Theres something worrisome. Put that in the worrisome category. Do we have the barclays u. S. High yield spread or corporate spread . Were trying to bring that to you. That has been coming down and down and down. I think its an interesting point. Jeffrey begunlap pointed to this yesterday. I think it is worth keeping an eye on. Oh, thats not good. Worth keeping an eye on where we are in terms of that spread. Of course leading to some high prices being willing to be paid borrowing costs are low. I dont like that. While on the subject of bonds, lets head to the bond pits, Rick Santelli at the cme group in chicago. Rick . Thanks, david. This is the epicenter of the credit bubble right here. Absolutely. Look at a twoday chart of tenyear note yields. But if you look at the next chart it explains why we continue to bump along the low closing yield of the year, right around 257, intraday. There was a violation, yes, the journal pointed out, adequately, we had an intraday, 256 since about november, but it really is most about the closing yields. If we want to consider weight going on in the world it isnt only a credit bubble when it comes to junk. Look at a different category of junk. Look at spanish 10s. Look at this chart intraday. Taking a nose dive under 3 . Whats supposed to happen in economies when they get better than expected data as was the case in spain . Their yields are supposed to pop. But lets not think about that. Lets go to the 20year chart. Do you see a lower yield in the 2. 93 on the ten and we wonder why our 10year is having a problem pushing yields up. Which would you rather own . Lets look at the currencies because theres a lot of things going on in the currencies. If we first look at whats going on, with the dollar, the dollar is fascinating because right now, it is a whisker away from trading down to the lowest levels, really since the summer of 12. Theres a little nip there, right around march, that were going to have to take out. If you look at the euro or the pound, theyre just screaming, screaming. So really want to hapedy cap weight going on in the Foreign Exchange markets, maybe in deference to thursday ecb meeting and try to reconcile how theyre going to try to push yields lower with quantitative easing on one happened or some of the improvement in economies like spain, mario draghi going to have one heck of a job in the currency market, isnt believing hes going to do much. Back to you, carl. All right. Thank you very much, Rick Santelli. When we come back, shark tanks kevin oleary has an interesting perspective in investing. The dow down 63. The dow down 63. Huh, 15 minutes could save you 15 or more on car insurance. Everybody knows that. Well, did you know that game show hosts should only host game shows . Samantha, do you take kevin as your lawfully wedded husband. Or would you rather have a new caaaaaar say hello to the seasons hottest convertible. Ohhh. And say goodbye to samantha. [ male announcer ] geico. 15 minutes could save you 15 or more. Six months ago here on the floor of the New York Stock Exchange, twitter went public at 26. Now with a lockup ex firing and lots of insider free to sell their shares its down to 35 and i cant say you think its going to turnaround. You said it was going there last week. Yes, i did. Come on. I was like you were saying positive things and said but its going down you said dont Pay Attention to where stock has been. Right. Pay attention to where its going. Got to sell it. Look now really, down 10 i said it was going to 29. Look everything can bounce. The problem is that, you know, you had this lull into thinking there wouldnt be a lot of supply and the supply is heavy or the stock would have stopped by now. I mean its not like the tech stocks away from it are falling a part. Theyre not. When we come back, stop trading with jim. Squawk on the street will be right back. Right back. Over 1. 2 billion eyeballs are on us during the two weeks at wimbledon. True tennis fans want to know whats happening, they dont want to just see whats happening, they want to know and understand why its happening. Anybody can just put data up, but we want to get a reaction, make it far more interactive. We rely on the cloud to provide that immersive digital capability. I mean its not like the tech if i told you that a free tensecond test could mean less waiting for things like security backups and file downloads youd take that test, right . 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. Time for cramer and stop trading. Tale of two ipos. Zoes kitchen, by the way the Restaurant Group has been under tremendous assault. Fast casual mediterranean food. Bunch of people recommended it, its not working. Expensive versus the group. The one that came public that had the least fanfare i know which was trinet, Human Resources company, tnet profitable at General Atlantic deal, filed the market deal yesterday, and this is a company that shows you when you actually make money, when youre profit oriented, deutsch bank, morgan stanley, jpmorgan recommend it and the stock is pflying as it should. The market likes profits not tweets per share. Nowhere did he talk about tweets per share. Focused on the elusive earnings per share. Im so old, keep thinking about earnings per share. P es. Zoes, another tell, whenever you see the two letters, nm, what is nm for p e . Not meaningful. Yeah. Of course as mark haynes would say youre from the church of whats working now and that is whats working now. Eps. Im a little agnostic. Mark haynes would always do that. I think theres a little bit more there is a time for these growth stocks. There has been, in fact, 2013 was a pretty good time. True. We had a nice go away not a Goodbye Party but Transition Party for larry kudlow and his suits have never gone out of style. I think about the same thing for earnings per share. Earnings to work with tonight. And piteny beaus. One of the best performers in the market and i flagged that. People felt email, why do we need postage meters. Theyve got a Great Software business i think is doing well. Digital business. Zebra is something i said this is interesting, bought the motorola business, simple technology. They own rfid. And i think its a really good x company. Combination has not blossomed into a higher stock price. See you tonight. Thank you. Check in with simon. Coming to you, david kostin, goldmans chief u. S. Equity strategy withing with us next on the show. Were going to look at apple 600 a share. All roads lead to june 2nd. Also ahead, what this countrys 10 million million airs are spends their money on. Hour two of squawk on the street. Street. Tall the building is, or how ornate the halls are. It doesnt matter if there are granite statues, or big mahogany desks. When working with an investment firm, whats really important is whether the people behind the desks actually stand behind what they say. Introducing the schwab accountability guarantee. If youre not happy with one of our participating Investment Advisory services, well refund your program fee from the previous quarter. Its no guarantee against loss and other fees and expenses may still apply. Chuck vo standing by your word, thats what matters the most. Marge you know, theres a more enjoyable way to get your fiber. Try phillips fiber good gummies. Theyre 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. Whon a certified preownedan unlimitedmercedesbenz . Nty what does it mean to drive as far as you want. For up to three years and be covered . It means your odometer. Is there to record the memories. During the mercedesbenz certified preowned sales event now through june 2nd, youll get complimentary prepaid maintenance and may qualify for a twomonth payment credit. Only at your authorized mercedesbenz dealer. Welcome back to squawk on the street. Our road map begins with the markets. Dow down 75, all three indices in the red. Goldmans equity strategist david kostin live at post nine will help us navigate it all. Twitter the stock down 10 as the major lockup expires. What should investors do now . Apple bouncing back trading above 600 a share. Find out if now is the time to buy. First up the divergence in the bond and equity markets have many worried. Joining us david kostin is the chief u. S. Equity strategist for Goldman Sachs. Great to see you again. Good morning. Early in the year you guys said the markets would have a struggle at some point in 2014. Correct. But that the end of the year wouldnt end on that sour note. Correct. Is that period are we in it, is it over, just beginning . I think the environment or narrative we think about for the market is that the economy is slowly improving. Bad weather in the First Quarter, but the Economic Data you saw on friday and the employment would give us some confidence that things are moving forward. I would emphasize in particular that Capital Spending is a critical part of our Economic Forecast and specifically for the stock market forecast. Im forecasting about 700 billion of corporate spending this year. And the important reason to emphasize that, 80 of the money that was spent last year, has companies have given guidance on that amount of spending and thats up 7 for this year. We have some reason to believe and some reason to have an argument behind our investment thesis the economy is Getting Better. People are still looking at the q1 gdp number and seeing Business Investment down five. Did that take wind out of your sails . The deal weve had, so many over for 250 companies have given us that sense of guidance. The capex tends to be backend loaded anyway. Still the forecast remains. I think that leads to a thesis of investing in companies that will benefit from an improving trajectory of Economic Activity. Eog resources, amazon, basically the high degree of operating leverage, thats what you really want to be opening as a Portfolio Manager. Maybe the stock market agrees with you but what do you make of the bond market . Carl alluded to the fact that yields are back to the lows of the year. The u. S. Dollar, everyone thought would strengthen on the back of higher yields and better economy is at the weakest point weve seen in months . No question starting at 3 and 10year treasury yields january 1st and now at 2. 60 or so would be a surprise, surprise to us. Our forecast is around 3. 75 by the end the year in terms of bond yields rice pg. The equity market really is driven by earnings. The issue here is that the market is trading at a pretty high level relative to history. Average median stock trading more than 17 times so thats a pretty high relative to, you know, many decades of history. The starting point of valuation makes it more difficult for equities to be rising. Why the more opportunity to choose inside the market. David, do you really think that the that if youre forecasting that the 10year yield will be 3. 75 by the end of the year, we can go from 2. 6 to 3. 75 and it wont upset the equity market . Well, the funding costs for corporations theyve taken advantage and have been very robust bond market and the Corporate Credit market so fixed era, Balance Sheets, and Many Companies are using the money to grow. So i think the equity market sdmishsz im sorry f the equity market soar, bond yields rising that rapidly to 3. 75 by the end of the year they would be worried, would they not . Our forecast is over 3 gdp growth in the second, third and Fourth Quarter as we see some Economic Activity grow, earnings well see, well see that improve as well. The argument is that the economy is Getting Better and that would lead to a higher bond market. My focus is on the equity market and the equity market suggesting things are in pretty good shape. Why do you think the yields are as low as they are at the moment . Is the signal we get from the bond market broken because of the positioning we have at the moment . Weve got a note from alan russkin at deutsch bank overnight, on one hand maybe the fed was right the stock effect of all the paper they hold is keeping Interest Rates lower and then you have the major Short Covering because we thought the big rotation would come and that these treasuries would be pummeled. Its not happened. Their leverage positions are now theyre covering. Would you have sympathy with that . The sympathy that i have is really for whats happening on a fundamental basis. You can argue sentiment, positioning, flows, might explain why yields are where they are. The same argument why the opportunity at equity market. A flow story for 2014. Not about fundamental mentals, earnings, narrow dispersion, narrow tight concentrations where people are expecting profits. Not a lot of variation in terms of valuation. Most people would have the view the market is at a higher end of the range of fair view. Thats my view. Tends to be more positioning and money flow leading moves to the up or downside. Really a tactical market as opposed to more strategy, why the idea of operating leverage is a way to benefit for investors to benefit from economic environment Getting Better. Do you believe m a is on the rebound because companies see rates rising and do you believe m a is masking what would otherwise be a weaker equity market . So margins have been hovering at just under 9 . We saw the data points for First Quarter, pretty much right in line with that. Its been there for three years. Its not as though companies have the ability to lift margins. Why is the m a activity . Great funding market in Corporate Credit. Number one. Number two, stock prices historically speaking are at high multiples. A high currency to be investing. The economy Getting Better would be the time to be investing whether merge are or Capital Spending, investing for growth, now is that time. Plenty of margins, plenty of cash, dollars to be spent on buying back stock and paying dividends. This would be a good time. Were talking big picture, macro themes here. Everyone saying now is the time, its a stock pickers market. Individual companies with individual names, is that really whats going on here . Its always a stock pickers market, right, by definition. People have to choose stocks. When you have say a Group Returns is the narrowest its been in 30 years. Thats to say the spread of returns which typically over a 90day period is about 30 Percentage Points now around 20 Percentage Points. In the Consumer Discretionary space around 15 Percentage Points. Its the first percentile in 30 years. 25 of Hedge Fund Net assets are in the Consumer Discretionary space. Its a challenging time. Sandbox is narrower today doesnt sound like a stock pickers market from what youve said. Youre talking about major correlations. Its a more challenging environment theres been a breakdown of the correlation between discretionary and staples, right . That is bearish the returns, the opportunity set, the capture, the alpha opportunity for the Portfolio Manager to capture. Its more difficult now, more challenging. Doesnt mean its not a stock payers market. Its more difficult. People who look at ukraine as this openended flammable geopolitical risk and whether or not they could hang over the market for the rest of the year . Certainly geopolitical risks, issues in the south china sea, the islands, issues in europe. Zoes not all of them involved a world power like russia. Thats correct. Its a risk. To simons point, maybe more represented in the fix income markets than the equity market. Think about it in what way does it influence the u. S. Equity market, either through sales or revenues of a corporation, it has to be through the risk premium in the market, what people want to pay for equities and those are the transmission mechanisms we look at. The twitter selloff today weve seen it down 10 , individual name here with a lockup expiration, but these growth names have been lumped together, the momentum stocks high valuations, and theres been pressure on it. Is that over or is there more selling in that area to come . As a strategy, we have discussed this in the past, in terms of rotation of momentum. So when momentum stock basically hits a not momentum stocks but as a strategy, momentum reverses that tends not to be a factor that leads the market Going Forward. So the idea of strong price momentum, the idea of opening stocks with high eb to sales, enterprise value to sales, has not been a successful strategy over time, one year, three year, five year basis. Those are the attributes we think about looking more for valuation as a characteristic to look at that. You mentioned dog and amz. Any other video names . Citric, bristol myers, high degree of operating leverage. The analysts at Goldman Sachs have a buy rating on those, consistent with the screens we run as a strategist. Good to see you again, david. Good to see you. Goldman sachs. Lets get over it to dominic chu for a market flash here. Hey. Whats going on, carl. Check out shares of delta. The stock moving higher after the airline said it would buy back 2 billion dollars of shares and boosted its Quarterly Dividend by 50 to 9 cents a share. Its been a good year for delta. Up more than 100 . Thats a double over the last 12 monthsp. Back over to you. Yeah. Sort of leading the rally in airlines. Thanks for the flash. Up next, twitter sliding deep into the red as that lockup period expires. Should investors be worried where the stock is headed. Plus, we all know what an alibaba ipo could mean for yahoo but what about the many other smaller firms with stakes in this massive company. Find out whos in at alibaba and who stands to make the most cash. Squawk on the street will be right back. Right back. Ameriprise asked people a simple question in retirement, will you outlive your money . Uhhh. No, that cant happen. Thats the thing, you dont know how long it has to last. Everyone has retirement questions. So ameriprise created the exclusive. Confident retirement approach. Now you and your ameripise advisor can get the real answers you need. Well, knowing gives you confidence. Start building your confident retirement today. Twitters lockup period for almost half a billion shares held by insiders has expired and able to sell them today. Priced 6 a share up to around 75 and now it is worth about half that. The big question is, how many of those insiders will sell. Carl spoke to Dick Costello last week. This is what he had it to say. Benchmark announced one of our early investors afownesed they have no plans to sell. Frankly after speaking with most of our major investors with the company, since prior to the ipo, many of those investors have declared that they have no intention to sell. We feel great about that. Its, frankly, one of the reasons probably the primary reason we decided and announced we have no current plans it to have a secondary offering. So he spoke to most of the big investors and many of them said, that they wouldnt sell. Which kind of leads a lot of open question marks and no wonder the stock is down. It has to be said one of the main reasons not to sell at the moment will be because the stock is so depressed. Yes as pisani pointed out if the last hour, their price, their average price, is way below where we are right now. They would be taking profits if they sold today. The decision to sell if youre an insider is different from the decision to buy or sell if youre a retail investor. If youre a Venture Capitalist, one of the employees, spend money on the mortgage, it is a different set of decisions or skewed decisions. Its hard to tell based on this move, considering theres so much supply, coming to the market, went back and looked up facebooks first lockup expiration, that was august 16. 271 million shares of Facebook Stock were released and the stock fell about 6. 27 . Subsequently it went down and hit its alltime low. So obviously double the number of shares being released today. Absolutely. Thats got to be having a factor. The question for twitter is are they growing fast enough and do they have enough users . That seems to be the analyst and investor debate around this stock. Like facebook you might not resolve it six months in. Something you resolve a year out. Obviously the fundamental drivers of Revenue Growth, whats dictating the stock not the lockup period. Speaking of new shares hitting the market, rumors swirling the ipo alibaba filing is set for this week. Investors circling this name in more than a decade in hopes of it going public. Besides yahoo which stands to make big money from an ipo who else is there . Kayla tausche joins us with more on that. Who stands to win from the alibaba ipo . Theres an elite group but when the alibaba f 1 gets released, may not show us much more than we know from a financial perspective. Margins, longer backdated earnings and maybe an elementary share table holding, but we want to learn a little more about who makes up the ownership of alibaba. A refresher of sorts of who is in ahead of this big deal. The original investor is softbank. In 2000, plugging an initial 20 million into the company. Adding to that, over the first couple of years and now its stake stands at 37 of the company. Yahoo famously paid a billion dollars for a 40 stake in 2005. Sold a portion of that in 2012. Its ownership is 24 of the company. And im told from sources it will be selling roughly 208 million shares in a deal, sources talking about a windfall in the range of 13 billion for yahoo if the company is valued at 150 billion. Now in 2009 private equity firm General Atlantic partners bought an undisclosed amount. The valuation around that time about 10 billion. Two with years later, more swarmed to buy shares. Silver lake led investors that bought about a 5 stake of the Company Valued around 32 billion. Sovereign wealth funds from china, dubai, alongside Hedge Fund Like the u. S. Viking global and silver lake and temasek were in that deal they helped alibaba finance yahoo stake in 2012 when they bought it back. That valued the company at roughly 43 billion. Now the ipo will have both newly issued shares by the company and some shares being sold by investors. Though investors im told will have a couple more months to decide which of them will actually cash out, which of them will be selling and how much. Certainly interesting to note that theres a lot of u. S. Money, lot of u. S. Private equity, that will see a big paper gain when this company goes public. Yeah. So interesting, kayla. I mean as you say, interesting to note all those investors. I have to say i wasnt aware of all of them, including hedge funds which have become more and more active in Venture Capital. I mean, what else are we going to be looking for when we read through the 400 pages, whether it be this evening or tomorrow night . Its going to be soon. Were not going to get necessarily a full update on the Current Quarter in terms of alibabas performance, but we may get a lot more on the operations of the business, particularly how they get to their margins. Right. David, i think the biggest question for people who are looking at the alibaba ipo is what does this Ownership Structure look like exactly. Of course the big Sticking Point in the debate over whether alibaba would list in hong kong or list here in the u. S. Was whether they could have the controlling ownership stake like we see, this super majority we see in a lot of the u. S. Tech companies. That being said, this is a conglomerate made up of a bunch of companies. It has a host of investors. Roughly 40 investors have gone into alibaba since it began in 2000. So what will the percentage of the stakes be . How is it structured. What type of Class Breakdown will you see between the shares and what does that ultimately mean for what it looks like as a public company. Hopefully there will be some tea leaves there from that company. Besides the Ownership Structure, i mean, kayla, i would think it would be interesting to see where the Revenue Growth is coming from. This company is so massive and has so many different streams. It has consumer business, business to consumer, ecommerce and we see a lot of this high level Earnings Data coming, especially recently from yahoo when it disclosed what alibabas top level growth was and what its profits were for the Fourth Quarter of last year. We wont get First Quarter numbers but we will see that breakdown. Youre right. Of exactly what each business is contributing to alibabas overall bottom line. And theyve been investing in a lot of companies and different areas, whether its payment, whether its ecommerce, b to b, c to c and how much each of those Revenue Streams is growing will be a big deal. Even money markets. Theyve moved into that as well with all the cash balances of their customers. They suddenly created what is an enormous money market potential Mutual Fund Business at some point. Do we know how much money this cash has, alibaba . I dont know that we have the updated figures. We do not have that. The Balance Sheet will be interesting and yeah, exaxially, what type of businesses theyre getting into david. They have a twitterlike service that is used by alibaba users and Business Owners that operate on that system. They have been getting into the music business through some of these products. So they have a lot of different tentacles in different businesses. Well want to see what it looks like from the underside. Thank you so much. Kayla tausche joining us talking alibaba. When we come back how are american millionaires spending their money. Find out what theyre buying and almost more importantly what theyre not buying when we come right back. Ck. Honestly, the offseason isnt really off for me. Ive got a lot to do. Thats why i got my surface. Its great for watching game film and drawing up plays. Its got onenote, so i can stay on top of my todo list, which has been absolutely absurd since the big game. With skype, its 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 whoyour boss . Rk for . Yourself . Your parents . Your family . At baird, what matters most to you. Matters most to us. As an Employee Owned firm, our Financial Advisors have the freedom and resources to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. At your ford dealer think . They think about tires. And what theyve been through lately. Polar vortexes, road construction, and gaping potholes. So with all that behind you, you might want to make sure youre safe and in control. Ford technicians are ready to find the right tires for your vehicle. Get up to 120 in mailin 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. A short word thats a tall order. Up your game. Up the ante. And if you stumble, you get back up. Up isnt easy, and we ought to know. Were in the business of up. Everyday delta flies a quarter of Million People while investing billions improving everything from booking to baggage claim. Were raising the bar on flying and tomorrow we will up it yet again. Now to apple. Trading back above 600 a share. First time since november of 2012. Whats driving the apple surge and how much higher can it go . Jean monster joins us. At piper jaffray. Overweight rating on apple. 640 price target. Ahead of the stock split i would think the 6 had 00 level is pressurely psych purely psychological but a win for tim cook. Its a win. Been a long time. Were coming up on almost two years since its seen these numbers so its a win. Theyve essentially manufactured this by the stock police and increased dividend. Give them credit. Thats probably the biggest reason the stock has gotten back to 600. Different reasons Going Forward but thats getting back to 600. Shouldnt investors worry its manufactured in your words sort of financially engineered higher stock price . Sp. Probably not. The reason is they still have a lot of unlocked assets. 160 billion in cash so yes, theyre manufacturing that. Theyre using Financial Engineering to get there. Essentially unlocking the cash they have through either dividends or share buybacks. Thats all legitimate, thats a good company, Smart Company getting the stock to move higher. I think the part that investors should feel confident in owning apple over the next six to nine months are the products coming out. A lot of talk about those products but the investors i talk to tend to feel that theyre not as optimistic about those and i think thats the opportunity in the stock, is to own it ahead of the products coming out. Yeah. I mean for a long time, gene, you could argue that tim cook was on the back foot as far as financiers or wall street was concerned. I think you could argue now hes got their number. Because if you look at the dates in the diary, so the stock split is on june 2nd, 7 for 1, bizarre ratio, arguably tailor made to get them into the dow at some point. June 2nd is when they come through with the product announcements. Angela arent coming from burberry her first stock award june 1st. She will be in on any bounce. I think the timing surely stands out in the diary, doesnt it . It definitely does. As you said, june 2nd is an important date. The first day of their developers conference. They probably arent going to announce anything big but they will talk about new software and hint at new products at that point. Thats an important date for investors. Try to triangulate what the new products are. Agree with that. Fast forward from june 2nd to the end of the year, several new products and i think investors will get optimistic despite where theyre at with them today. I think there will be a sea change in terms of how investors think of apples road map. Sounds with a 640 price target, simon mentioned miss arantsds not bad for her foray into apple. Ask you about twitter, i know you dont cover it but you have a lot of these growth names in your portfolio. That you do cover. The 10 selloff on the lockup expiration, you think investors should make a lot of that . Well, i think twitter right now is really focused on monetizing just the advertising side and they havent branched beyond that. I think part of the issues investors have is around the engagement numbers. Its really a single one trick pony at this point. They want to get more into payments so again i dont cover it but i can understand why some investors are nervous. Fundamental reasons as well. Thanks for joining us on apple and a little on twitter. Gene monster. Piper jaffray analyst. Coming up an interview with the lvmh chairman and ceo Bernard Arnault. Doesnt get better than this. A member of our 25 list of top Business Leaders, joining us to talk about the state of the luxury consumer. Luxury consumer. Over 1. 2 billion eyeballs are on us during the two weeks at wimbledon. True tennis fans want to know whats happening, they dont want to just see whats happening, they want to know and understand why its happening. Anybody can just put data up, but we want to get a reaction, make it far more interactive. We rely on the cloud to provide that immersive digital capability. That corporate trial by fire when every slacker gets his due. And yet, theres someone around the office who hasnt had a Performance Review in a while. Someone whose poor performance is slowing down the entire organization. Im looking at you phone company dsl. 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. About an hour into trading some of the stories were talking about, 7 30 on the west coast, 10 30 wall street, aig among the biggest losers, down 2. 5 despite a First Quarter earnings beat. Revenues fell below consensus and saw a drop in premiums an increase in disaster losses. Shares of office depot up 18 . The retailer increasing full year guidance, posting better than expected results and announcing plans to close at least 400 stores by the end of 2016. Coach falling to a 52week low. Stock down more than 23 this year. Speaking of luxury, americas wealthiey esiesy esiest individ spend more, buying cars, going on vacations. What are they not buying . Robert frank surveyed millionaires from around the country and has the answer. Sara, we tend to think of millionaires as big spenders, diamonds, ferraris and yachts. But our millionaire survey of people with a million or more theyre more practical when it comes to their luxuries. The big spends are Home Improvement and vacations. More than half of millionaires spent more than 2500 on Home Improvement over the past 12 months. Viecation more than vacation more than 60 spent more than 5 . Among the wealthier, those worth 5 million or more, the majority spent over 10,000 on vacations over the past 12 months. A lot of spending going to vacations. As for the coming year, its all about vacation, Home Improvement and cars. As to which categories will get more of their spending this year, travel led the way, followed by home decorating, autos and then entertainment vacation, clothing not so much. And millionaire women by the way plan to increase their spending on cars more this year than millionaire men. Again, clothing and fashion sort of toward the bottom. So these are millionaires measured by net worth. Not the top incomes. Talking more of the 10 of income earners than the 1 . If youre looking for the future of luxury and where theyre spending might want to bet more on restoration, hardwood and starwood than tiffany or coach see coach shares down. Interesting to see what Bernard Arnault says about luxury spend today. Practical toward experiences and family rather than stuff on status for todays millionaires. We were asking, robert, about what theyre not spending on. I didnt see the stock market, for instance, on the list. Or really any kind of investments that we tend to think of as traditional. We did investments today and found out, in fact, theyre bullish on the stock market. Theyre putting 46 of their new money into equities. But this is so were really looking at Consumer Spend here as opposed to investing. It was surprising that clothing that fashion, jewelry, collectibles, hobbies, things we tend to think about with the wealthy, not so much. Again theyre sort of home oriented and experienced travel oriented. Shocked sara eisen. I didnt see beshgen bags as a category. At least handbags. Well be sure to put that in the next survey. Well tell you where theyre going to spend. Fashion and clothing, 4 , not as big as you would think. Yeah. Its worth remembering there are 10 million millionaires in this country. Absolutely. This is a big number. For the moment, thank you very much. I know youll come back. Throughout the day with more on that. Up next on the program, big banks are arguably still reluctant to lend, borrowers already on high Interest Rates are looking elsewhere for loans and Venture Capitalists are taking note. Peer to peer lender prosper got 17 million in funding, just the latest round. The ceo will join us after this break. Mine was earned in korea in 1953. Afghanistan, in 2009. Orbiting the moon in 1971. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation. Because it offers a superior level of protection. 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Thats the power the power, thats the power of today. Cleveland clinic. Call today, for an appointment today. Welcome back to squawk on the street. Check out whats happening with well Care Health Plans moving higher after firstquarter profit more than doubled as the Health Insurer posted stronger revenue and increased in membership ranks and raised adjusted earnings forecast for the year. See that stock is up about 5 just off session highs. Back over to you. Thanks very much, dom. Meantime Steve Liesman back at hq and new revisions to estimates on gdp. Steve, looks like even lower for First Quarter. Not going the right way. Were getting a bunch of revisions in saying gdp is now estimated in minus 0. 2 at the lowest end, minus 0. 8. This number originally forecast or estimated by the government at plus 0. 1. It was a huge upset to the downside when it first came out. Its getting lower and lower. This morning on the trade data, missing being less than the government estimated. Here are some of the estimates that are out there. Morgan stanley now saying 0. 5 . Macro economic advisors, 0. 6, jpmorgan 0. 8. Getting to a point where it could be almost a full percentage point. Serious weakness there. We reported yesterday that some people are vising up their forecast for the Second Quarter. See if that revised up. Certainly the weather and perhaps other factors having more of an impact than initially estimated by economists and we will do an official wrap it up day getting our panelists of eight or nine economists when we get all of those numbers. Wanted to give you the flavor of whats coming out with more weakness in the First Quarter than originally estimated. Sime. Some. I would have thought i mean i appreciate its not good news but if the jobs growth is as we saw it, which was actually not bad through the First Quarter, i know it was dented, soft, but still happening, that might actually mean that the labor market is stronger than we thought if overall the economy was contracting, steve in. Youre right there is a disparity between the stronger job growth and level of gdp. You wouldnt think that level of gdp would create the kind of job growth we had. Let me caution, simon, theres more date to come. There are initial estimates in the governments report for the First Quarter. It doesnt have certain data that its imputes. Initially imputes it and then goes back in and revises it. Some thinking gdp does eventually get revised higher with a bunch of things that are to come in the coming weeks. Well have to be following it. More importantly, sara was saying to me, that actually the estimate, the forward looking estimates are rising. Is that correct some. . Yes for the Second Quarter. A bunch of companies are out there. Actually with a handle on the gdp forecast. The median estimate we have in our cnbc wrap it up date is about 3. 8 . So thats a big turnaround. I wonder and you alluded to this, i wonder if the First Quarter estimates really continue to go negative, how much that sets us up . Is it possible to see 4 growth, the quarter after we have a negative . Its possible. I mean most people dont think that the economy was all that weak in the First Quarter. Obviously whats happening is, the data keeps coming in weaker from the First Quarter, but all the data weve seen the High Frequency data, sara, has been positive in march and april. And actually its all stepping up in a classic snapback format. Its january, february, march, april is the way a lot of this data looks. We had the ism services component, the manufacturing component, so youre getting a lot of this snapback in the classic format which is why people are getting more optimistic about the Second Quarter. Dont get too optimistic about that. What youre going to do, average these two together and be back to our 2 growth weve had since the recovery began in 09. Thats an acceleration. Ill take it. Steve liesman at hq. Private investment and Venture Capital firms are stepping up their bends. Prosper marketplace, a leading peer to peer platform is announcing a 17 million round of new funding to help drive its growth. Prosper has originated now they claim more than 1 billion in unsecured personal loans since 2008. Joining us now is aaron vermoot the ceo of prosper marketplace who joins us from san francisco. Good morning. Good morning. You connect lenders and borrowers. I imagine, correct me if im wrong, more like social media, not regulating it, just taking a fee. Not taking a position within the market yourself . No. Were not taking a position in the market. But we have a proprietary credit model risking and scoring and pricing the loans but not buying the loans or taking proprietary risk. More like an Online Travel agency where people would search with the company they want to deal with, they are putting themselves up for this them to approach them saying this is what i want . Thats right. Borrowers apply for a loan and lenders can search on a number of different criteria and decide which loans to invest in . You and your father parachuted in at the beginning of last year. Why has the growth been so strong . You know, Online Marketplaces have been transforming make sectors of American Business as we all know. And Consumer Finance is no different. We came in, made some changes to the company, hit the gas on marketing, and the growth was there. So we really were operating and executing but the marketplace was just really big and growing very quickly. It says here that the valuation of the company has gone in one year, from 38 million to 650 million. Is that right . That is correct. Does that does that pass the smell test to you . If you understand where the company was when we took over, it does. In february of 2013 the loan originated only 9 million of loans in the platform. In april we had 100 million. Weve had over ten x growth in 15 months and shows no signs of abating. As this industry continues to boom youve seen it, peer to peer lending, is there a role for the banks to play . Do you want them completely out of this picture or partner to them to increase your scale . Banks obviously play huge role in our economy and they will for a very long time. Both lenders, online lenders, marketplaces like us, and the banks were doing liquidity matching. A lot of things banks do well never do and some things we do we may do better than the banks. Especially on the small consumer type loans. But i think theres a role for a long time for both isnt the incentive for the banks to set up or partner in a way where they are able to buy an advantage in the marketplace, to put themselves first, to get loans at some sort of premium. Wont it become a Dynamic Market that could leave you behind because you dont have the vested interest . You know, our role as a exchange or a marketplace is really to set up the environment where borrowers and lenders can connect. That means offering loans to borrowers at a rate that makes sense for them but also making sure we can give lenders a return that compensates them for the risk. Actually, with our lower operating costs and online structure, we can offer loans that are less expensive than what the banks are offering. You are, of course im sorry. Didnt mean to interrupt you. Complete your thought. Were offering a product that really isnt offered very often by large banks which is unsecured credit under 35,000. You know given the Regulatory Environment theyre just not doing it. Just one final question. I mean you were obviously number two as a in the peer to peer operator in this country. Number one is lending club. A lot of conversation about whether lending club would have an ipo, presumably thats quite important to you on the profile that the industry has an your own valuation . Absolutely. We you know, we think that a strong lending club ipo is a validation of the marketplace and of Online Marketplaces in general and the power of peer to peer lending. Yeah. Will you slip in behind them if they come to market . We have no plans to ipo. Were really in execution and growth phase. You know, were growing quickly, creating a lot of value and want to focus on that. Good to meet you. Have a great day. Thank you very much for joining us. Aaron vermuth the ceo of prosper. Still ahead on the show, Luxury Retail giant lvmh, a member of cnbcs first 25 list, Business Leaders during the past quarter century, we will be speaking to the chairman and ceo mr. Bernard arnault when he joins us live from paris. Squawk on the street will be right back. Right back. Passenger road trip buddy. Lets put some music on. Woman welcome to learning spanish in the car. Passenger youve 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. 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. We know were not the center of your life, but well do our best to help you connect to what is. But well do our best to help you connect to what is. 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 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. Nice shot of michigan avenue. Lets get to the cme group. Rick santelli with the santelli exchange. Hey, rick. Well ask the question everybody wants to know the answer to. Whats the big next move in the stock market . I think our guests, one of the most famous technicians, at least on this trading floor, tom demark from demark an lytics thank you for taking the time this morning, tom. Great to be here, rick. Tom, quickly before we get into the thick of it, are you bullish or bearish on stocks for the next large move . Let me rephrase, the next big move thats 10 or larger do you think its going to be upside or downside some. I think downside. We have modest move this week and then the market should top finally. Finally. All right. Well listen, can you give us the insights as to why youre making that statement . Okay. We use a Natural Market rhythm type of analysis and our Market Analysis was telling us the market should have topped after the october rally, late december 31st or mid january as we said on the air at the time. Many of the markets did top temporarily, and you did get peaks in the nasdaq and the russell and related markets early march, which was a fiveyear anniversary of the 2009 low. Whats happening, each market you got the march peak in the russell and the nasdaq excuse me and now weve got the upcoming peak in the s p and the New York Stock Exchange composite. The dow jones average effectively made the high as i predicted on the air with you december 31st. Were coming up for a secondary move on that high, and all we need is 16,660 possibly within the next couple of days, and that should top that market out, finally. Its all right, listen, tom, let me interrupt you for a second. Sure. We have a minute left. In this minute, tell me how do we know if were wrong . In other words, if the market goes higher, what level are we wrong for looking for this correction, and on the downside, where does it need to trade to basically say your statement is correct for the big correction . Okay. The march low in 2009, the dow jones made a low and had a rally of approximately 6,500 points. And it topped may 2nd, 2011. Had to pull back to the october 4th low, which we call that bottom. And weve had another move up, approximately the same number of points. That should exhaust the market. Typically, markets have two moves up with an intermediate decline of 60 , and we did see that. What we do is look for a market at that high that looks similar to what took place at the intermediate correction and the New York Stock Exchange, you have the charts there, it shows that from the peak in july 2011 into the october 4th low, 62 trading days. We inverted that chart and were currently at 62 days. Were saying right now were getting the inversion of what occurred into the low on october 4th at this peak, and we should see a high once we go above the recent highs and have a new recovery high close, we should exhaust the market. And i think were excellent, tom. Listen, were out of time now. But were definitely going to have you back. And i guess after listening to you, alls i could think of is ticktock ticktock, its getting pretty close if youre a technician that buys into mark analytics. Thank you for taking the time. Simon, back to you. Thank you very much, rick. Up next, this painting hasnt been seen in public in nearly one century, but now its up for auction. 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During the mercedesbenz certified preowned sales event now through june 2nd, youll get complimentary prepaid maintenance and may qualify for a twomonth payment credit. Only at your authorized mercedesbenz dealer. Welcome back to squawk on the street. Lets talk sausage. Hillshire brands, stocks are moving higher thanks to strong sales of jimmy dean sausage. Overall sales rising to 955 million as it raised prices to offset higher meat costs. Hillshire formerly the business of sara lee, currently trading up about 4 , off session highs, carl. A painting hidden away for decades is about to hit the auction block. Robert frank reveals the mifltry that may make the masterpiece even more valuable in todays Million Dollar minute. Its a sensation. A sensation worth millions from one of the greatest artists of all time. This is Claude Monets muphea from 1907. Reporter but it has a story behind it thats priceless. Clark ventures with mining, records, and banking made him one of the wealthiest and most powerful men in america. His daughter collected some of the worlds finest art, but she went into is he collusion in the early 1960s and remained hidden for the rest of her life. And now, this is the first time the public is going to see the painting since 1926. So how much for this multimilli multimilliondollar monet . Its a hard estimate of 25 million to 35 million. The record price is from 1919. Reporter this monet painting is from the same water lily series that set the world record. For 80 million. Reporter for cnbc im robert frank. Tonight, along with that monet, christies will auction over 400 items from the reclusive heiress estate. Check out insidewealth. Cnbc. Com and get updates from robert frank on that auction. I know, simon, you managed to see a few things that will be sold. Yeah, last night. Including the rothgo, which im a huge fan. Id be interested to see how much that goes for. I think thats for the auction next week, which is postwar and contemporary, and incidentally in that, theres a frances bacon, remember the 140 million for the most expensive art. They put together another trip tick. Thats the star attraction, and ins dpentally, Leonardo Dicaprio turned up last night, so he may well be in the audience. But looking rather grungy. I wonder if hell be an art collector. It will be interesting to see where the Big Investments are. Always an interesting barometer. Are you a rothgo fan . Yeah. Just looking at the markets, remember tuesday was a bullish day . Weve crunched the numbers. 15 of the last 17 tuesdays of 2014, the stock market has risen an average. 5 . Completely now disapproving your theory. Yeah, maybe well break the hot streak, friday the worst day for trading. Somebody writes in on twitter, the s p is up every other odd number day of every month beginning with the letter j. Some people need to get out more. So much for our patterns. I sense sarcasm in the use of the market statistics, guys. Well see where were go, down 86 now. See you later on. If youre just joining us, heres what you missed earlier on. Announcer welcome to squawk on the street. Heres whats happened so far. This is the kind of genius buyback that a lot of executives should Pay Attention to, because most of them just do this buying. Hey 100,000 buy, good side. No. Think about it. Cook is. [ bell sounds ] environment or the narrative we think about for the market, is that the economy is slowly improving at a very bad weather, of course, in the First Quarter, but the Economic Data on friday, with the employment, would give us some confidence that things are moving forward. Were coming up on an almost two years since its seen these kinds of numbers, so its a win. Like you said, essentially they manufactured this by the stock split and the increased dividend, but give them credit for doing that. Good tuesday morning. Its 11 00 a. M. On the east coast, 8 00 a. M. Out west. We have to start with twitter. Shares are sharply down, as you can see, down almost 11 as the lockup expires as of the close last night. Insiders being able to sell for the first time almost 500 million shares. Stock hit a high of 75 back in december. Now trading at about half of that level. Of course, you recall they went public on november 7th, about six months ago, right here at post 8 on the New York Stock Exchange. Pricing at 26. And if you read the s1, you knew this day was going to come. But its been interesting to watch, kayla, the investors sell and sell and short and sell into this news, and as cramer said this morning, the supply is obviously very heavy, otherwise it would have stabilized now. Especially with the moves in momentum names and twitter in the last few months. This is a date investors have been talking about since february, since the last lockup. A lot of people thinking about twitter, thinking about it after First Quarter earnings says i dont want to get in until after this lockup, because youre going to see a day of weakness like that. Yeah, yesterday, of course, the company is aware of all of the Media Attention to this. Maybe as a countermesh urks they roll out that partnership with amazon. Amazon cart, which got a little traction yesterday, but clearly not enough to offset the concerns. We did talk to twitter Ceo Dick Costolo last week after the Earnings Report. We asked if he felt any pressure on the bottom line. Heres what he had to say. Im focused on three things growth, operating efficiency, and operating leverage. That second and third are absolutely in service to steadily improving margins. Steadily improving margins. So as a highgrowth company, what i want to make sure year doing is not starving the Growth Engine while focusing internally on Getting Better and better at operating efficiency and operating leverage in service to margins. People are trying to figure out if theres any pattern recognition. Facebook went through a similar exercise, heavy Insider Selling, as the lockups expired, zuckerberg with the promise not to sell. That was for a period of time. The insiders of twitter saying we have no current plans to sell. I talked to a big investor this morning and theres one key difference that he raised between what happened with facebooks lockup and what happened with twitters lockup, and i know well be speaking to analysts and speaking to others this morning, and id love to get their take. Heres the issue. Facebook fell below the issue price. It fell below the ipo price. If youre an employee who had preipo shares, you were not in the money. So you had no incentive to sell. Twitter, even at 34 a share, is still above its ipo price. This was an ipo that created nearly 1,500 paper millionaires, watched the stock fall 50 . What does that do to a psychology of a workforce that has these shares and theyre trying to decide what to do with them when theyre still in the money right now . Yeah. Employees of twitter, when we were there, we asked whether they believed in the stock at 70. And most people, whether they meet it or not, said we knew at that period the valuation may have been ahead of the actual core Business Model. But therell be a point in here where they begin to wonder whether its 26 or some other number, what is at what point is the stock being treated unfairly . And we will see. In the meantime, the dow is down almost 100 points, as merck continues to be a big loser, a big drag on the dow. Merck selling its consumer business to bayer for 14. 2 billion. Theres an investor briefing in boston today. Well see what frazier says, but a big business, not growing a lot, but coppertone and claritin are household names. And it seems like the entire pharma industry, dave has talked about this often, its going through a transitional period. Its getting smaller and trying to streamline the portfolios, figuring out whats growing, where they want to be, and it certainly seems like merck doesnt feel like the consumer industry is where its growth is going to be. Right. Sarah said before, the top of the hour, tuesdays have historically been kind to the market this year. Were up 15 to 17. Some like doug katz have argued the correlation has got to start to break down, but if it hadnt been for tuesdays this year, it would be down 7 as opposed to essentially flat. Well see what the afternoon brings. We will see. Theres been a midday reversal from negative to positive, or positive to negative. Theres no clear trend line there. Oftentimes, the market seems to digest whatever data its gotten in the morning and decided to go in the other direction. It will be news if we see the loss continue, down 92 now on the dow. When we come back, fed chair janet yellen getting set to testify inside the joint Economic Committee tomorrow, so what does the Committee Want to hear from yellen . Well ask chairman of that Committee Kevin Brady in a moment. Plus, Bernard Arnault making a list of cnbcs 25 most influential Business Leaders in the past 25 years. Arnault rarely does interviews but hell join us live later this hour. Know what the experts at your ford dealer think . They think about tires. And what theyve been through lately. Polar vortexes, road construction, and gaping potholes. So with all that behind you, you might want to make sure youre safe and in control. Ford technicians are ready to find the right tires for your vehicle. Get up to 120 in mailin 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. Welcome back. Take a look at the Energy Sector. One of the big losers on the s p. Dom chu has more. If you look at energy, its gone from moving to the lower side to be just the only green sector so far today. Its up only about a third of a percent. So not crazy. You have eog leading the way higher, anadarko rounding out the quarterly earnings, and then names on the refining side, the valeros of the world, and cabot oil gas. So Energy Sector swinging to at least the only positive sector right now, carl, on the day in the s p. Back over to you. Dom, thank you so much. Kevin oleary of shark tank author of the cold hard truth, joins us this morning on the phone as we work our way around some camera issues. Kevin, good morning to you. Great to be here. Were going to Start Talking about apple first. Rejoining this exclusive club back to 600 for the First Time Since 2012, about two weeks after they announced the 7 for 1 stock split, better than expected Quarterly Results and the better than expected iphone sales and Buyback Program from 60 billion to 90 billion. Psychologically, kevin, its been important for bulls to get above 600. They do pay a dividend. What do you think . Ive owned the stock since they declared the dividend. It declined after it occurred. The stock split is irrelevant. Thats just Financial Engineering. It doesnt matter. I dont like stock buybacks, carl, because the management is not forced to execute those. What i trust is a dividend increase, because that cash comes into my account, makes me feel warm and fuzzy. So i would have preferred the deployment of more cash, increase in dividend, but im happy with the stock moving north. Now, my index cycle, in other words i like to have 20 or 30 mid20yearolds in my basement in the weekend with my sons friends and daughters friends and i asked them, do not upgrade on the 5s. Theyre waiting for the iphone 6. I bought more stock. I trust that index more than any other analyst out there. So the fact, kevin, that its hitting the 600 level, even though its come back slightly from that, really theres no product news, it was more of the Financial Engineering, even though you do get a Dividend Payment in your account, but the fact that its hitting that key level on some engineering moves, rather than a product announcement, how does that make you feel as an investor . I dont care about these price targets. Theyve proven over long periods of time to be irrelevant. What matters is Free Cash Flow after capital expenditures, so im buying into the next two quarters, that even though well have no breakthrough products at the upgrade cycle, on all of the products, not just the iphone, on everything, is going to be robust and generate more cash. We really havent seen the china story play out. So im an optimist on the stock. Its finally done the right thing. Declared a dividend, so it lets me become a shareholder and all i ka irabout now is cash flow. Thats t people debate this whole product cycle and jobs versus cook and all that stuff. Who cares . Watch the cash. Thats all that matters. I am disappointed in the stock buyback. I never trust those. Just increase my dividend, thats all i care about. But i think apple is going to continue to go north because theres going to be people like me, which are value yield buyers, looking at the story, saying look at the cash. I love that. Well, speaking of that, twitters a different kind of story. They obviously dont pay a dividend. They dont post a profit. Theyve been challenged on some user growth and obviously being punished today on these Insider Selling availabilities, as the lockup expires. What would you do in this case . Kevin . All right, well, sometimes you lose the camera. Sometimes you lose the camera and the phone. Our thanks to kevin oleary as we tried to talk about twitter. Definitely got to apple. In the meantime, janet yellen set to deliver her Economic Outlook testimony for the joint Economic Committee tomorrow. What does Congress Want to hear from the fed chair . Joining us this morning is texas republican congressman kevin brady, chairman of the joint Economic Committee whose camera does work on capitol hill. Congressman, good to see you again. Thank you. Obviously, new fed chairman coming off the heels of a decent jobs number, but a not good q1 gdp. Whats the most important question to start with . Well, i think now that the fed has sort of decoupled itself from the Unemployment Rate and has gone to an eye of the beholder monetary approach, you know, how does she what measures is she using in the fed to assess the strength and markup . Theres a lot going on right now. Obviously, anxious to see a normalization of the Interest Rates over time. So would like to have a little more clarification in that area. Of course, you know, theres a lot of talk about a new normal for full employment in america, a lot of concern about what the complete exit strategy will be for the fed, including all that mortgagebacked securities, excess bank reserves. So how will she tackle the Bigger Picture . It would be your preference, im guessing, to see that exit happen sooner rather than later . Yeah, it is, i actually think, the fed for sometime now, has created more uncertainty within the market, certainly i think within Business Investment. You know, i would like to see the normalization begin, as you said, sooner rather than later, because i think it will create more certainty Going Forward. Congressman, you mentioned bank reserves. I know that these large u. S. Financial institutions have hundreds of billions of dollars just sitting at the instead of lending it out. What sort of answers do you want from chairman yellen about exactly how she plans to grow the economy through lending and serving Small Businesses and consumers . Yeah, well, as you know, if there is an up tick in the km e he economy, and banks begin to want to lend again, thats the fuel for inflation. So whats the fed going to do . Is it going to raise reserve requirements, pay higher interest . What impact does that have on the economy . It goes to the heart of the dual mandate that the congress has given the fed. So i think were all interested in that approach. Youve been critical of the recovery at large because by historical standards, it has been more tepid than average. On the flip side, it has lasted longer than average, and im wondering how much credit, if any, do you give the fed for that . Were a month from the fifth anniversary of when the recession officially ended. Were still missing about 1 trillion from the economy, about 5 million jobs if this were just an average recovery. I think the fed both contributed significantly the financial crisis. I think they calmed the water admirably during the financial crisis. But its been trying to do too much since then, and i think has actually run its course as far as their employment boosts. Well, if the exit were to happen sooner and rates were to rise, you do know that the things that are helping to prop up the market right now, like mergers and acquisitions, like Capital Spending, are going to be crimped as the cost of money gets more expensive. I think that Clear Communication really is critical Going Forward. Secondly, wall street is doing great through this recovery. Main street, family wages, theres actually fewer adults proportionally working than when this recession ended nearly five years ago. So clearly, i think qe has run its course. I think the fed, i think Clear Communication matters. Congressman, one effect of qe has been to push investors into riskier Asset Classes like leveraged loans, like junk bonds and like very distressed assets, just searching anywhere to get any sort of yield as the fed has been keeping Interest Rates down. Im wondering what, if anything, you think the fed should be doing to ensure a safe exit for some of the individual investors out of some of the riskier assets, if thats possible . Yeah, i do worry about, you know, what this qe has done for seniors and for saviors or savers, and, you know, as Warren Buffett famously said, you know, when the tide goes back out, well see whos wearing swimming suits, and whos not. I worry about those who have been moved into risky investments who frankly didnt want to. Well, were going to be watching the hearing closely tomorrow. Thank you so much, congressman. Well see you then. Thank you, carl. Appreciate it. Congressman kevin brady of the joint Economic Committee. With the dow down 81 points, merck is responsible for a big portion of the losses. That stock is down 2 , major pharma news, america agreeing to sell the consumer unit to Germanys Bayer in a deal worth over 14 billion. Cnbcs meg terrell smoke to ken frazier about the deal. Shes in boston to tell us what he had to say. Over to you, meg. Thanks, kayla. Yeah, talking with mercks ceo this Morning Hours after they announced the deal to sell the consumer overthecounter Health Care Products unit to bayer for 14. 2 billion. He told us that merck is in the process of repositioning itself to focus on areas of strength and get out of areas where it cant be a leader and we could still see more. Were going to look for the best Growth Opportunities within that portfolio. So i wouldnt say were finished. Were going to continue to evaluate opportunities to create value, that would buy things that would make sense, a value creating opportunity, and to keep and build on certain things. Now, mr. Frazier was very clear that they dont want to do a mega merger along the lines of what weve seen potential deal between pfizer and astrazeneca, but however, he did highlight the pipeline opportunities in cancer, hepatitis c, diabetes, alzheimers and other areas and said theyd be looking at those areas. We did also talk about taxes. This is a huge issue right now, especially with pfizer proposing to reincorporate in the u. K. To take advantage of that lower Corporate Tax rate. He told us that u. S. Based companies are at a competitive disadvantage when it comes to business development. I actually think that we need to lower the tax rate. I think we need to have a system that is a territorial system, or a hybrid system, and i think weve got to recognize were in a global war for assets, and were in a global war for business, and u. S. Companies cant be at this kind of disadvantage. Now, pointing out today that the companys about innovation, about working on research, and were coming to you here from the Research Labs in boston, so thats the message it wants to focus on. Not doing a big deal. But the issues with the Corporate Tax rate, and in the process of repositioning itself to focus on strength. Back to you guys. Certainly a landscape under transformation in the pharma sector, meg. Thank you for putting it into context with us, and especially with the big interview to boot. Meg tirrell in boston. Peertopeer lending company, lending club, picked up blue chip investors, preparing to be ipo ready in the next month. But will Market Conditions derail that plan . Well ask the companys ceo in just a moment. Plus, make sure you keep it here. Well have the rare interview with lvmh Bernard Arnault. Tdd 18003452550 there are Trading Opportunities tdd 18003452550 just waiting to be found. Tdd 18003452550 at schwab, were here to help tdd 18003452550 bring what inspires you tdd 18003452550 out there. In here. Tdd 18003452550 out there, tdd 18003452550 there are stocks on the move. Tdd 18003452550 in here, streetsmart edge has tdd 18003452550 chart pattern recognition tdd 18003452550 which shows you which ones are bullish or bearish. Tdd 18003452550 now, earn 300 commissionfree online trades. Tdd 18003452550 call 18886486021 tdd 18003452550 or go to schwab. 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First day of my life by bright eyes youre not just looking for a house. Youre looking for a place for your life to happen. Its called truecar. And truecar users. Save time and money. So when youre. Ready to buy a car, make sure you. Never overpay. Visit truecar. Com today. Gorgeous spring day in times square. Check out shares of barclays. Its taking a hit saying it collapsed an Investment Banking revenue had pressured its First Quarter profit and is still hurting income in april, as well. Barclays is expected to cut the Investment Bank size and improve profitability, potentially costing thousands of jobs. Barclays, as you can see there, currently down near 4 , again just off those session lows, kayla. Back over to you. Yeah, dom, a big highprofile of exodus of executives there, hurting that stock. Elsewhere in banking, lending club, a peertopeer lender, has challenged traditional institutions by going straight to borrowers. This week, the company is partnering with a bank announcing a new Strategic Alliance with unions. What does in mean for the company . Lets ask renault, the ceo. Thank you for joining us. Thank you for having me. What does it mean to have a bank like union bank, 100 billion Balance Sheet backing up a company like yours . No, really, the lending club is really to transform the Banking System to make it more transparent, more consumer friendly, more cost efficient, but we want to do that in partnership with the banks. And really associate the banks with transformation, and the partnership with union bank is another step into this direction where really customers of union banks are going to benefit from the best of both worlds. They have the low cost of capital from union bank and access to the Balance Sheet, so the low cost of operation of lending club, the commission of both can deliver the credit and experience. Will customers of union bank then be able to get in on some of the loans that lender club is underwriting . Thats right. Okay. We open up the platform to union bank customers, union bank would be able to invest on the platform, as well, and well jointly have the products. The consumer household, theyve cleaned up so much of the Balance Sheet, right . But their urgency to get back into credit cards isnt that strong compared ed student loa. How much appetite is there on the Household Level . Its not necessarily all fresh money. A lot of what we do is helping consumers pay off the existing debt. Like a College Tuition . College tuition or credit card. Credit card balances, carry interest at very high rate, often 16 , 18 Interest Rate. So lending club and now lending club and union Bank Partnership can help lower the costs for consumers and help them refinance at the lower Interest Rate. You offer loans to a wide credit spectrum with Interest Rates ranging from 6 to 26 . Its hard to find yields like that elsewhere in the market. But talk about how you actually establish those rates, what you peg to in the market, and how can consumers feel about those rates with other institutions . Benchmark is really credit cards. Again, cards carry interest at 16 , 18 . The average Interest Rate on the money lend, threeyear term loan is 12. 5 , a fixed rate. As a consumer, you know you wont be repriced at any time. So from the investor standpoint, as you said, very attractive yield, invest at 12. 5 in this kind of environment that explains the really the growth weve seen in the appetite. You have a 4 billion portfolio. You picked up blackrock, t. Rowe, wellington, people say this screams ipo. And you could be ready for an ipo may or june. How are you viewing the market . And how is that Readiness Program moving . Yeah, so we dont comment on the timing of the ipo at this point. But we feel that it could really be unintelligible fervor increase brand awareness, and also continue to build up loyalty with the investors on the platform. We have tens of thousands of Retail Investors investing in the loans we offer, who are really excited about the opportunity to invest also in the company. So youre not dissuaded by the market right now, though, when you see volatility like today . No, at the end of the day, were building lending club for the next 10, 20 years, and whatever the market does, its not going to have a lot of impact on our plans. The ceo of your competitor prosper said last hour that a strong lending club ipo would be good for the peertopeer marketplace overall. So certainly you have some fans even in your competitors out there. Renauld, thank you for joining us today. Thank you. Lvmh chairman Bernard Arnault rarely does interviews, and hasnt in ten years, but today speaking to us live. Well talk luxury business and ask him how he feels about making cnbcs list of the top 25 people in business. Thats coming up next. Plus, the bells about to sound across europe as the dow is down 87 here. A few minutes left in europes day. Well get the close and the impact on the afternoon session in just a minute. [ indistinct shouting ] [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. All on thinkorswim in a we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. All right. Europe is about to close. Simon hobbs will wrap up the market day. Simon . Yeah, red around europe. We turn negative for the Third Straight session after wall street opened in negative territory. Here, were okay before that in europe. It was relatively flat. The u. K. , of course, coming back to trade after yesterdays Public Holiday in britain. We are at the height of earnings season in europe. Far too many of the companies for me to run you through in this short period of time. But reuters star mine is suggesting 45 of the stock has missed estimates and forecast within the last 30 days come down for the next year by 0. 9 . Certainly barclays is in negative territory today. The Investment Bank clearly an issue, currencies, fixed income, commodities, earnings down 28 . The stock down now 5 on that major u. K. Bank. Of course, the new ceo will outline how hes going to reinvigorate the Investment Bank, or strip it, depending on your view. And ubs in zurich, the stock doing really well. Theyll pay a special dividend as they reorganize themselves into a Holding Company so that next time if one bit of the bank gets in trouble, it can be let go and not burden the swiss taxpayer and fairly upbeat ceo gave an interview to our colleagues in london. Take a listen. It was a very solid quarter. We were all profitable in our businesses, all regions. Most importantly we achieved targets and 13 target has been achieved. Actually 13. 2 . Which is a Great Condition for us to also enhance our capital return strategy. In the meantime, more broadly, the stampede continues into peripheral euro zone debt. The yield on the italian 10year a few moments ago was below 3 for the first time ever. And the euro continues to strengthen lets have a look at a chart. Now up 6. 5 against the u. S. Dollar despite the fact that on thursday you have the European Central bank policy meeting. Guys, mario draghi has gotten himself into a vicious circle. The more they talk about the strength of the euro and the need to embark on qe, the more people enter the euro zone to buy sovereign debt, because they think theyll be buyers of it, and so the euro strengthens. Thats why spanish 10years below 3. Yeah. Unbelievable numbers. Twice the return you get on the 10year here. Obviously, yeah, but lower than the peak of the credit bubble before this whole thing happened. Unbelievable. The power of the Central Banks kind of just theyre changing the market, distorting the market, if you like. Its craziness to some people. Other people are making an awful lot of money. Simon, thanks. Our next guest has transformed the luxury goods industry during the past 25 years. Lvmhs 60 brands comprise wines and spirits fashion and leather goods, perfume, cosmetics, watches, and jewelry, with iconic names like Louis Vuitton, dom perignon and debeers. A member of the cnbc first 25 year, bernard art naue arnaud, for being with us. When this 25year period began, everybody thought japan would own the planet earth. How did you know that luxury is a concept was truly going to go global . We decided early in the 80s that there was a lot of potential with Global Growth to sell luxury products, and more precisely highquality products, because i think the world luxury maybe is not completely unintelligible with our industry. What we try to do is the products of the highest quality with a lot of artisan, like haute couture dresses, and the market for that was expanding, as well as level of living was going up all over the world, and these strengths has been very strong since the 80s. So today, growing into group for this 25 years, weve a portfolio of around 60 brands. Some of the best brands, i think, in the world. Yes. These are products of highest quality. And youve been quoted as saying affordable luxury. These are two words this dont go together. Weve seen so Many Companies, many of them public now here at the nyse, that have tried to expand that market by creeping slightly down on the price spectrum. Do you not believe thats a sustainable model . I dont think the research for quality is compatible with lower prices. You have values Business Model. Our Business Model is based on creativity, innovation, and quality. And in doing so, we are able to really create a relationship with our customer all over the world, where more and more are looking for the best products. And in doing so, we are creating new products. We are also employing more and more people in for instance in france where we create fantastic Louis Vuitton bags and haute couture dresses, and this is a trend, i think, will stay for the next ten years, maybe. And i hope for a longer period of time. So we search for highest quality of products is growing. You know, i often compare our industry to other fastgrowing industry. For instance, i have a great admiration for apple and for the iphone. I have myself iphone. But can you say that in 20 years people will still use iphone . Maybe not. Maybe well have a new product or something more innovative. But what i can say is 20 years from now, im quite convinced that people will still drink dom perignon. But even so, some over the past 25 years have challenged the idea of exclusivity thats been the hallmark of luxury. You talk about emerging market growth, ecommerce and the new purchasing power of the middle class. How do you make sure that dom perignon, Louis Vuitton handbags, that some of the products that are the hallmark of the luxury industry, stay upmarket, as you say . You mean these products, researched for their own quality. And the fact that people want to come to visit, for instance, a dom perignon sellers, or fantastic Louis Vuitton on champ and there is a link between the history of the brand and the future of that brand. And i think its the reason why we have been successful, because we were able to build on some historic roots that have been created in the past and that are projecting the future. And this is a reality that people feel all over the world. And more and more so, especially in emerging countries where people are more and more educated. So i think the future is still very positive for these highquality products. Im not saying for other industries selling more products, there is no future, no. Theyre different markets. But for our type of industry, for the creativity, the innovation that would bring to a very high quality level, and mixing with the history of our brands, i think we are matching demand that is grow all over the world. Bernard, speaking of different markets, how much do you worry about one particular market going into a severe recession where luxury buyers would start to disappear . Im thinking of china as an example. Is that something you spend a lot of time worrying or thinking about . You know, i think you speak you just said recession, and speaking of china. My definition of a recession for a country that is growing at 7 around is not a recession. It is a fastgrowing country. If you take europe, europe certainly is not growing as fast. I think china, i would say, may have some bumps over the years is and have been through very, very positive trend for many years, economically, the buying power of the chinese population has been increased dramatically. And i think well continue to be increased in the years to come. And the future for our industry, for our products and for our rents in that country is still very good. But as always in china, you have ups and downs, and in spite of what you can consider as a lower level of growth, its still growing very fast. And for us, we are seeing in our activities in china, still very good level of demand, and the level of knowledge from the chinese population about quality products is growing very fast. So it explains why the best products are still very successful in china, and will continue to be successful for the next few years. A number of chinese cities that are becoming in the stage where they can buy highquality products, is going to grow and continue to grow for the next 10 or 20 years for sure. So im confident about the future of china. Well, bernard, your track record over the past quarter century would suggest you know what youre talking about when it comes to the future. Our congratulations, and our thanks again to you. Berna berna bernard arnauld, a rare int he view. We want to check on twitter. The stock is still down sharply after the lockup period expired. Our next guest upgraded twitter to a hold a few weeks ago. We wonder if hes change his tune. Well get an answer from him. 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Change your number. Turn it up. Androgel 1. 62 . Coming up, hedge fund heavyweights revealing shorts yesterday. Were about to find out what stocks our traders think could be heading for a plunge in the bubble bath. Plus, shares of twitter taking a big hit as the lockup expires. Well talk to a top analyst about the two signals hes looking for from twitter today. And is apples mojo back . The shares closing above 600 bucks for the first time in a year and a half. Carl icahn wont deny he can buy more, but should you . All straight ahead on the halftime, kayla. Thanks, scott. Twitter trading sharply lower after its lockup expired for nearly 500 million shares held by insiders. That stock down nearly 12 , selling accelerated this morning. Yousef is head of research at cantor fitzgerald. He has a hold on twitter and upgraded it to hold from sell three weeks. Yousef, good morning. Thank you for joining us. Thanks, kayla. When you initially upgraded to hold from sell about a month ago, yousef, you were basically saying you believed the new ad formats were coming. Given that there are hundreds of millions of shares that are up for expiration today and could be sold, i mean, how much do you think the technicals will overshadow any positives for the time being . Well, look, in the short term, absolutely, the technicals are going to define where the stock goes. Out of the 450 million shares, by our estimates, there are probably somewhere between 200 to 300 million shares that could actually or should be coming to market over the next days and weeks. So clearly, we did the upgrade recognizing in the short term the upgrade to a hold from a sell, recognizing two things. One, that most of the downside from 75 all the way to 40, where we downgraded it, was pretty much done, meaning that were not going to see another 45 down from the 40 from the 40 level. And, two, we feel that over the longer run, i. E. , the next several quarters, we think there is theres enough interest in things happening within twitter on the ad format, and what theyre doing potentially in the ecommerce that could justify us getting more positive on the name. Yousef, you had a sell until the 10th, which was working beautifully, and i just wonder, do you wish you had stuck with it a little bit longer . You know, in hindsight, were all a lot smarter. Honestly, understanding that there were 450 million potential shares coming to market, that would definitely be a driver for stocks to go down. But impossible to call the bottom, we actually did the upgrade before they reported earnings, so that could also be another catalyst to taking the stock down further. So, you know, a hold is still neutral on the name for us to get more positive on it, more positive on the name, we need to see the stock probably pull back a little more from here. Youssef, a lot of the insiders like dick costolo, jack dorsey, some of the other big investors, saying theyre not selling, thats a big chunk of the shares. The rest is employees. What do you think is making up the psychology of the employees at twitter when you watch a stock fall 50 from its peak . Well, thats exactly it. So even if you add big shares and benchmark and jpmorgan, all of these account for 35 , 40 of the 450 million shares. So clearly, as i said, theyre north of 200 million shares that eventually will find their way to the market. But if you own the shares by the way, there are exemployees who have no incentive of holding the stock anymore, but if youre an employee, now sitting at 35, your cost basis probably in the single digits, so for sure youre probably going to want to at least sell some before the before the market potentially could take the stock even loyer. Yeah. Some have tweeted the best thing to do is go long tesla for all the teslas sold in the valley over the next few months. Youssef, thank you for your time. Thank you, guys. Joining us, talking about the twitter lockup expiration. When we come back, Rick Santelli telling us how a small number has a large impact on the economic future. Rick, you want to explain . Absolutely. Heres the number. 3. 0 times 10 to the minus 8th power, or said another wa way,. 00000003 , or lets say it another way three millionths of a percent is going to have a huge impact on everybody who lives on the planets life. If you want to know what im talking about, yep, youre going to have to come back in about five minutes. Lets put some music on. Woman welcome to learning spanish in the car. Passenger youve 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. 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. Today is tuesday today, we greet you. Treat you. Care for you. Today, you can come to Cleveland Clinic for anything, everything or just to get that thing checked out. Big, small, and yes, the best heart care in the nation. Its here everyday, for everyone. Thats the power the power, thats the power of today. Cleveland clinic. Call today, for an appointment today. 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 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. Welcome back to squawk on the street. And todays edition of the santelli exchange. Well, you saw my numbers. You saw three times 10 to the minus 8th power. You also saw, you know, a lot of zeros to the right of that decimal, five to be exact. And, of course, maybe the best way to say it, three millionths of a percent. What is all of that . Ill tell you. 140 years. 140 years as long as weve had precise instrument records of weather. The planet is 4. 6 billion years old. We are using 140 years worth of data to try to address and predict the behavior of a system 4. 6 billion years old. I would think that, you know, i had tom demark on, one of the greatest technicians of all time, and i really want to call him up. Heres what im going to tell him. Im going to say, tom, ill give you 140 years worth of Dow Jones Industrials average, and i want you to tell me with some accuracy where the dows going to close 4. 6 billion years from today. Sounds easy, doesnt it . Listen, the president and many in the u. N. And our government and governments around the world are really trying to ramp up climate change. Listen. This is what i think of when i think of science. We all know that the real issue and i wish all politicians and World Leaders would get on a page thats got a little bit more solid footing we need to take care of our planet, address solution, and come up with common sense prioritized rules to do so. If youre telling me my kids and their kids will live in a country with brownouts and blackouts and the cost of energy going up when were surrounded by a very clean bridge fuel like natural gas, im sorry, it doesnt make sense. Listen. We know that our Corporate Tax policy and rules need to be addressed. How Many Companies do we see doing m a just to get offshore . We cant even fix that. And youre telling me that these same leaders are going to tackle Mother Nature . I pretty much think im done. Back to you, carl. Its a hedge, rick. Dont forget, its a hedge. Rick santelli in chicago. Rumors about alibabas filing continue to grow, so when the filing goes public, who stands to benefit . Well tell you in a moment. Huh, 15 minutes could save you 15 or more on car insurance. Everybody knows that. Well, did you know that game show hosts should only host game shows . Samantha, do you take kevin as your lawfully wedded husband. Or would you rather have a new caaaaaar say hello to the seasons hottest convertible. Ohhh. And say goodbye to samantha. [ male announcer ] geico. 15 minutes could save you 15 or more. [ male announcer ] geico. At your ford dealer think . They think about tires. And what theyve been through lately. Polar vortexes, road construction, and gaping potholes. So with all that behind you, you might want to make sure youre safe and in control. Ford technicians are ready to find the right tires for your vehicle. Get up to 120 in mailin 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. Honestly, the offseason isnt ive got a lot to do. Thats why i got my surface. Its great for watching game film and drawing up plays. Its got onenote, so i can stay on top of my todo list, which has been absolutely absurd since the big game. With skype, its 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 youve heard all the rumors swirling at the alibaba ipo filing is set for this week, possibly today. Investors have been circling this name for more than a decade in hopes of it going public, and kaylas got some more on what we might or might not expect tonight after the close. Well, the conventional wisdom that im hearing from my sources is that f1 is expected to hit after market today. The original investor, though, even though we talked about yahoo to no end, softbank, in 2000, it made an initial investment of 20 million into the company. Thats now a 37 stake. And in anticipation of the ipo, softbank shares up 67 . Yahoo getting a boost, too, because yahoo still owns 24 of the company. An sources are talking about a potential windfall for yahoo in the 13 billion range. Thats if the companys valued at around 150 billion. Of course, the big question from investors, how yahoo will deal with potential taxes when it does monetize that stake. We dont know the answer to that yet. There are some other paper gains at least that some firms in the u. S. Will see when alibaba goes public. Private equity firms like General Atlantic, silverlake, sizable stakes, as well as some sovereign wealth funds in china, singapore, and hedge funds like viking global here in the u. S. Have been snapping up some of the debt during alibabas various financings over the years, carl. So even though this has been a decade in the making, there are a lot of very patient investors, many of whom are here in the u. S. , whose investors could stand to see a big appreciation in those investments. One of my favorite conversations on this show last week was with kara swisher who said, you know, you dont think you want to understand it, or too foreign to understand, wait until they make bids for u. S. Companies in social or in tech, then silicon valleys going to start to pay notice as to what these guys are up to long term. And thats one reason why you would see a company like alibaba go public here in the u. S. You go eight currency of u. S. Shares to actually use an issue, to be able to do some of the deals. So there could be a lot of activity from this company Going Forward. Finally, we talked to youssef squally of cantor about twitter, down 11. 5 . Its been a long slide today for an event that we said at the top of the show people knew we were coming, and cantor moved off the sell to a hold. As he said earlier, cant find the absolute bottom. Well see you who far this thing declines. Still eight bucks above the ipo price. And thats a number theyre watching. Scott wapner has a lot to work with as we hand it over to the halftime. Hey, scott. Yeah, twitter is not the only one of the high fliers getting banged up. Guys, thank you so much. Have a great rest of the day. Welcome to the halftime report. Hashtag plunge. The stock simpgs to its lowest level since the ipo. Were going to debate a top analyst on where it goes from here. Bubble bath. Super investor icahn calls out Athena Health. Student stock picker, the winner of Institutional Investors portfolio challenge is here live with his best play right now. Lets meet todays starting lineup, pete, murph, jo