Transcripts For CNBC Squawk On The Street 20140528

Frans 10year yields, spain is at 2. 88. Just to put that in perspective. Rates are way too high in this country. Im not kidding. Talk to frank blake, home depot. Look at europe at this time, kind of a mixed bag. Stocks started with small gains off the lows, about flat, lets call it in a lot of different ones. Not a lot of news out of europe this morning. Consumer staples, basic resources, health care lagging, financial services, banks, media and telecoms up. Our road map and it does start with the markets. Looking to make history, the s p aiming for another record high. Weve got earnings from Toll Brothers and michael kors, adding to what has been positive sentiment. Lots of buzz at the code conference surrounding googles driveless car. Carl is at the event and he is going to fill you in. M a also in the spotlight as it has been lately. Valeant increases its offer for allergan. Ge making its case to the french for why it should be allowed to buy al sted. Futures on the high after the s p hit a record closing high for a second consecutive session, shy of 1912. On the earnings front toll brother which posted better than expected results, profits more than doubling. Michael kors beating the street with its fiscal q4 results. Global samestore sales up more than, man seems hard to imagine, 26 . I didnt like the Gross Margins. Really . 26 . Samestore sales. Would be a little higher. Thats asking for a lot. Just telling you. They were giving up margin to make sales. 2 26 . Come on. Why the stock went from 98 to 95 and go over the Conference Call and theyre saying they thought analysts were expecting 60 , did not meet the expectations. This is my friend Herb Greenberg all over this thing. Look, yes, its kate spade and this company are the two best in show in the accessory Department Williams sonoma best in show in all of retail. About a company that sports a roughly 20 billion market value. Its more than a double over the last year. Well more. Its had the momentum and no one has those comp stores. Then again, nobody no one can raise price here and, you know, i was hoping that kors would be able to tell a better story, but im looking for too much. If im an investor and see that run behind me, lets call it its lower than its high as you point out. Nonetheless should i be thinking margin compression, maybe things get a little more competitive. You just dont want inventory. You dont want inventory. Right. You never want inventory. Its a push for a big momentum stock is not what people want. Workday is not a push today. Kors never came in Toll Brothers this morning is going to be up in the premarket, up about lets call it about a buck and change over 4 or so. 35 cents a share, ahead of estimates. Revenue 860 million, well above estimates there, were betting 827 million. I love this court sghooerts Gross Margins doing the right thing. 26. 6, fiscal year 2013 backlog of units is 27. I think the average price of net signed contract after 729,000 versus 678,000 is good. They have a project in brooklyn that apparently is selling huge. I point that out because when you have manhattan real estate and brooklyn real estate you can raise the whole price of your average seller. Theyve got interesting projects right down by the water, at least theyve had one some time. Visited it this weekend. Im a believer in toll. 67 unit growth. Home building deliveries. This is a quarter that when you dovetail with the 2. 4 you mentioned for the tenyear says dont short this. Go long it. 37. Lets back up into the markets. Second consecutive session. Were right around 1912 on the s p. No longer seemed that concerned about what was a tougher road in march and april. Whats happened is that theres still one more rotation occurring. It is incredible. Go over the workday Conference Call. This Conference Call, this quarter for workday which you know is one of the Great Software service companies, knows you well we know each other, yes. This is one of the quarters that had they reported three weeks ago the stock would be down today. You said software as a service as opposed to sad, which is something you coined, software as a disservice. There are faux software disservice. This is mark benoff the king of salesforce. Com and this. A lot of companies that came public that were me too and not going i think to have a good run of it. Workday very interesting to hear the operating cash flow, not as great as i wanted. Right. But they won hewlettpackard which was a very big piece of business, won phillips and winning terrific not just Human Capital, their Human Capital software, winning finance including netflix. Thats one to watch. It was a good quarter. They in the Conference Call to this important point. Moving into a new area. In terms of a momentum stock with an incredibly high multiple we saw move from lets call it 50 to as much as 110 over a short amount of time, peaking when all so many of these stocks did in late february. February 28th, the day salesforce. Com opened at 67, went to 668, plummeted went to 68 then plummeted. High 60s to over 110 a share. Is this the end of the rotation, back to looking at okay, im happy with the multiple because the groth is there. That would be insane to do that. It would be insane to go back to the world that we thought was where we could value these companies on enterprise, value to sales. I dont like that. I do like the fact that they absolutely took another shot at oracle and sap and said dont worry about our business. Were not going back to that world. Were not going back to that crazy world. It does seem like a lot of sellers have finished in biotech. They finished in the high multiple tech. They finished in the momentum stocks but were not going back to that world. That would be too glib. Workday sold to you i like workday very much, but i dont like paying up here. Hows that. I think thats im trying to be a diplomat. The company has the best product. Thats not necessarily what makes for best stock. Workday headquartered out there in california where we find Carl Quintanilla at the inaugural code conference. Good morning, carl. Hey, david. Man, if you guys if anyone likes technology its been a Pretty Amazing 18 hours here at the inna nag gral code conference. Well talk about what Satya Nadella talked about his role at microsoft, but the news of the day the google selfdriving car. Unveiled by sergei last night. The first prototype made from scratch, no Steering Wheel, no brake, no pedal. Maximum speed 25 miles an hour although that could change over time. He sees couple hundred, 300 prototypes over the next several years and eventually this could lead to a partnership with someone like an ubber who by the way was a beneficiary of funding from google ventures. How does google go about building a car . Sergei was asked about that by walt mossberg. Heres what he said. Youve worked with partners like in the detroit area and germany and california. We use automotive suppliers. This is using car parts that are kind of standard but sometimes weve modified them to our needs. How about the whole body. I mean yeah. Weve worked with partners auto manufacturing firms that have helped us with a body. It so is the talk over the entire technology universe. Aaron levy of box tweeted last night and i quote, google is literally making a car and it actually looks awesome. The future, he says, is going to be incredible. Big lineup coming up today. Among the people speaking, travis callnick of ubber, john chen of blackberry, jimmy i owe veen of beats and massason of sprint and here on cnbc, jeff weiner of linked in, eric po of Hair Ventures and Brian Roberts the chairman and see of comcast. 9 40 well talk to kara swisher who interviewed sergei and satya last night and why she named the google car phyllis and talk about her ride in the car which was done a couple days ago. Phyllis . Phyllis. Okay. You are where the action is. Extraordinary. The west coast is where innovation is taking place. The east coast is where Financial Engineering is taking place. It will be interesting to see if these stocks which return to momentum style, do not in the end fall flat because these are not earnings stories. They are pizazz. And right, carl . Youre just getting a lot of pizazz. The car is not going to move google stock. But the Retail Investor likes the car. Yeah. This is a longterm story. No doubt about that, jim. In a way, the point of the conference not to talk about business questions as brin would call it and less interested in talking about last night but more the visionary aspect of technology which is what a lot of these leaders are all about. Right. Theyre not about inversions, theyre not about smith and nephew getting a bid from stricker. That was an indictment of the east coast. There are Technology Companies here not just about financial teslas . Flat iron building . Google does have a big they could ibm is starting its Watson Center in the fall in the flat iron area. People telling me they have good stuff involving spectrum and be careful. Dont go against ibm even though i am. Even though you are. Yep. We got so much more to talk about. Carl is where i mean carl is where can we give you the ball . You are our running back today. Were playing defense, linebackers or cornerback maybe. Ill see you guys in a few minutes. He will take the ball in a few minutes. By the way, those drivers, driverless taxi in new york city one day but what about all the immigrants. The first rung, man there wont be any. We dont want robots 25 mile an hour driverless taxis. Sha hail with your smartphone. Maybe our lifetime, maybe the very end. Can we just worry about the quarter . When we return by the way well talk about companies that are taking steps to make acquisitions or at least try to. First among them, valeant, which increased its offer for allergan. You heard jim mentioned smith and nephew, an ft story well take a look. Another look at futures before we head to commercial break and pointing to a slightly higher open. More squawk on the street after this. Look at that, 2. 473. I told you, of course, you can go to france and get paid a lot less, 1. 7 something. But thats the lowest since july, jim. The lowest yield on the 10year note since july. You come into this year saying im going to short that 10year were going higher, no. We should never have gotten to almost 3 a year ago. Should never have happened. It was out of sync with the rest of the world, where the rest of the world was going and our rates are too high. One of the reason why toll brother wills not stop today. Why this market does have legs, is because the market is going beginning to realize that lower rates make our businesses do better. This counterintuitive period going on for the last month we didnt like lower rates. A year ago remember we started that surge up to almost 3. It was wrong. Markets got crushed. No demand there. Bernanke initial comments there. Made a mistake. Its okay. Move on to m a this morning. Barely a day goes by we arent talking about it. Valeant pharmaceutical raising its offer for allergan. An unsolicited nasty battle, the cash battle up by 10 baux share. Stock component remains the same and the ratio the same at 0. 83 of a valeant share. Also General Electric improving its offer for alstom, according to an official in french president hollandes office. Sources say that improvement includes a pledge to create 1,000 new jobs in france over three years. That news follows a meeting between hollande and the ceo of General Electric, jeff immelt. I dont know where to start. Then we got some news out of the ft. Start with quickly dispatch with ge. My only question on ge announcement why they werent more prepared for that response from the french to begin with and perhaps didnts do the outreach earlier that seems to be taking place. This is one of the things with why didnt you play the card immediately, were going to higher people. Thats all i wanted to hear. But all you had to do was say, you know what, this isnt about firing. Its about hiring. This would have been a snap. Thats my take. Jeff immelt, im not going to criticize try to do the right thing, but a case to be made that had they gone in this is a chance to make this company bigger i dont think you would have much of a debate. Yeah. Bit of a surprise perhaps they hit that road block early on. It does seem theyre making progress. Move on to valeant, progress may be hard to come by. Allergan, i say finally, they had been taking a kid glove approach i would argue to combatting valeants offer yesterday. They did not this morning. Valeant as promised increases its offer, significant, 10 bucks a share in cash. The overall offer going to 58. 30 for allergan. You can see valeant shares there, thats the key still. The currency is a lot of the consideration, though the cash portion certainly is higher. As you see. They are also talking about this product and a cbr that would be valued as much as 25 bucks a share depending on this product. Its for macular degeneration. It would compete against lieu sen tis. And also region ron, good luck. Well get to so much more here. Ill go more in the faber report. Thats ways away. But that cvr is another part. An endless presentation. 200 slides long that valeant began at 8 00 a. M. This morning with bill ackman, of course, who sort of is leading the charge for them as the largest shareholder in allergan. What do you think about the nestle involvement. Thats another thing, right. Selling certain products to nestle they acquired with medicsis. Buy it for the idea of having restyla restylane, botoxlike from your nose to your down to your chin. It works like that. For really wrinkles around the mouth. And juvederm is a product allergan has pioneered against that. Whats happened is that you bought metasys. You fire a lot of people. Next thing you know you sell the products for 1. 5 because allergan has a product, they need this deal now. They got to get this done. That was a principle reason why they bought met sa sis. It is a rollup. Valeant is a rollup and they need the deal for any number of reasons, including their strategy, of course, is to continue to acquire, use a low tax rate, use the strategy that they claim is completely misunderstood by allergan in terms of really efficiently using capital, efficiently looking at r d, cutting a great deal of it. Thats the strategy. By the way pearson in the presentation saying the nestle deal is a win win transaction. The natural buyer and eliminating one more road block in terms of integration with allergen. Save smith and nephew for the mad dash. And nestle, what are they. Right. What are they . What are they now. Theyre big. A big they give you pimples with their chocolate and solve your face problems with this. Up next cramers mad dash as we count down to the opening bell and talk smith and nephew. A look at futures. Back with more squawk on the street after this. I make a lot of purchases for my business. And i get a lot in return with ink plus from chase like 60,000 bonus points when i spent 5,000 in the first 3 months after i opened my account. And i earn 5 times the rewards on internet, phone services and at Office Supply stores. With ink plus i can choose how to redeem my points. Travel, gift cards even cash back. And my rewards points wont expire. So you can make owning business even more rewarding. Ink from chase. So you can. You need to see this. Show em the curve. Do you know what this means . The greater the curvature, the bigger the difference. [scifi tractor beam sound]. Sucked me right in. Its beautiful. Gotta admit one thing. Cant beat the view. Introducing the worlds first curved Ultra High Definition Television from samsung. It is time for that mad dash. About seven minutes before the opening bell. We want to talk about consolidation in the parts business. Im talking parts for people, stricker, smith and nephew. A story in the ft no confirmation from me at this point. Read you some of it. Citing sources, process at an early stage, exact value that stricker is putting on smith and nephew could not be ascertained but any offer would likely be above the 3. 85 billion pound value, a report from the ft. Thats why. Exactly. Get the right price. Smith and nephew, hips dont lie, this is smith and nephew goes up against biomed. This is about hips, artificial hips. When you saw that merger the zimmer to buy biomet had been taken private many years ago, sold to right . You need to do a defensive acquisition. Stricker buys smith and nephew, its inversion, this is killing me that i didnt see this coming. Because its obvious that smith and nephew is a way to be able to do this inversion. Its a win win. I think it happens. And i want to make that point. This would be another inversion. Yes. For so stricker would, therefore, benefit from a lower tax rate in the uk and pointed out many times the ability then to start taking car that is overseas for deals in the u. S. Without having to pay taxes on bringing it back because you would no longer be a u. S. Company. In an inversion you do have to issue at least 20 of your company in the company youre acquiring has to receive stock in excess of or equal to 20 of your market cap. Which does at least prevent the biggest of deals. If youre 100 billion Company Issue 20 billion in stock. Thats not the case here. I wanted to make that point we talk about inversions left and right and all over the place. Stricker is issuing a statement. One thing thats important stricker up big. This is the pattern. This is the pattern when you do the inversions, the buyer goes up too. I think people dont understand at home one of the reasons why this market is working so well, is because companies are doing deals and the market is lapping them up. So then your banker which you have told me over and over again, i want to do a deal. I want my stock higher. This is a remarkable time in this business. Inversions are interesting as we said. Stricker says they have no plan to make offer for smith and nephew apparently. Where are you seeing that . Up there. Which would conflict perhaps with the Financial Times story. A dow jones headline that jim read you no plan to make an offer. This is how quickly things are happening. Remind mess of the 80s, when you comment, general foods got a bid. Gee. Boom boom. Gillette, come on. We are in a vibrant merger and Acquisition Market for any number of reasons, tax inversions a small part of that, although not insignificant. So much more to talk about as we watch stricker. Lets see smith and nephew stock price too. That was an ft story. We had no confirmation. The opening bell about four minutes away. We have so much more squawk on the street from here and the west coast. Trying. Female narrator through sunday, its posturepedic through sunday, its posturepedic versus beautyrest with up to 400 off. 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Since then under uk takeover long, different than here, they had to come out and put out a release and said were not. We have no interest, no interest at this time in making a bid. That is a requirement under uk law when theres this kind of action. Whats happening to stricker what about smith nephew. When i heard about the deal that makes all the sense in the world. Going to happen. Obviously the ft fell prey itself. Smith nephew shares up as much as 10 there i would assume are moving. This is the day, remember the old days. Bagged them, gunned them and liquidated them. Its a bad game. It is a bad game. Another reason why i dont like talking about other peoples stuff. Youre watching the opening bell. You saw, you heard them, look, at the s p real Time Exchange at hq, call it almost 50 50. A little more green. Here at the big board, an Aircraft Leasing company celebrating the acquisition of International Lease finance corporation. Who owned that . Aig. Aig. At the nasdaq, overstock. Com. Got to keep in mind, aercall. When you look at the boeing list of customers, its these guys and its a Company Called aer lease. How do they know theres so many orders . . The Leasing Companies take them down and sell them to china. Thats been a fabulous stock. 28 for the year. Look at workday this morning, up almost 5 . 8580. Workday. Heres the problem. Once again, workday is not what you wanted a couple of weeks ago. Its what you want now. All i can tell you is, im going to be at chartist for a second, i had a chartist on last night, i am not a chartist, but people who say this can only go up so far. Cannot go back to the level it was because were not going to make that mistake again and valuing these Companies Using one metric and the rest of the market using another. Be careful boworkday. The stock has had a big run. What about this one . Talking twitter up 2. 5 . Caught an upgrade today. Nicely above 30. Worst is over. I dont like worst is over but it does i mean theres got to be more of a reason. The worst is over. They have a mopub. A little over 2 . Some will take that. You want craziness. Here we go, barclays raised the its price target. Goes to 700. Were seeing stocks starting to bubble up again, i shouldnt use the word bubble, starting to appreciate because stocks have run up so much people are saying wait a second, this twitter lagged behind the rest of the group. Lets get behind twitter. Wish there was more rigor to this. I want to revisit hillshire brand, a story from yesterday, pilgrims pride, making an overbid for the buyer, hillshire is buying pinnacle, trying to break that deal making a deal for hillshire. Under its merger agreement has the opportunity to its board to review what it might view as a superior proposal. 45 a share. All cash offer. Pilgrims pride controlled by the brazilians. Right. Jbs. Some thoughts now going the other way saying hillshire is a maryland company, very you can do a lot of things under maryland takeover law to say no. Lets just leave it at that without getting into it. More like pennsylvania than like delaware. Also you have a young ceo at hillshire and you do have the opportunity, should it arise, should they want to, to change the consideration of their offer for pinnacle so it would no longer require a shareholder vote. They would no longer be offering 20 of overall cap in stock. In other words, it can accelerate the pinnacle buy which frustrates the hillshire pilgrims pride im sorry. There are ways they can do that under advantages over maryland takeover and the consideration so their shareholders would no longer have a voice. Doesnt mean any of that is going to happen but i bring it up. People have been talking about it, bubbled up. I didnt mention it prominently yesterday in my coverage of this deal. We have to understand that theres this deal, the hillshire deal important for hillshire to get pinnacle. In the socalled center of the supermarket, there has been there have been no growth why . Because of the ways of the world, people want natural and organic and when you are buy in jimmy dean youre not getting natural and organic. Hillshire needs to buy birds eye trying hard to be natural and organic. These companies are all challenged. Believe me, the meat section is not a place to be. In the supermarket these days. Its not. Its just not a place to be in general or im growing quinoa. Would you stop with the quinoa. Stop with the quinoa . Thats like stopping with 3d printing. Who likes eating quinoa. Im sure its not bad. Does it matter if it doesnt taste good. Rolls off the tongue nicely. Weve got some mcdonalds news out im told here. Just taking a look here. Thats not quinoa. They do not have quinoa burgers at mcdonalds. Just pointing out. Mcdonalds today announced an intensified commitment to the customer focus, strategic framework, plan to win and other actions to enhance longterm shareholder value. They say theyll return 18 to 20 billion to shareholder between 2014 and 2016 through a combination of dividends and Share Repurchases that represents a 10 to 20 increase over the amount of cash returned between 2011. People want they wanted more. They were hoping there was some sort of financial play that mcdonalds could do using the Balance Sheet to get things going in order to be able to overlook what they serve at mcdonalds. Theres also a sense that people mcdonalds better start getting with the loyalty program, the starbucks idea. Its not happening. The company did admit to Carl Quintanilla out on the west coast they are behind in much of the social and mobile. Starbucks going to china. Why . Having a meeting with the parents of people who work at starbucks. Howard schultz understands the culture versus ibm which seems to be helplessly left behind in china. Doesnt understand the culture. Sometimes you let things out i want to stop out for a second. Hopelessly left behind in china is ibm. Howard schultz meeting with the parents of people who work at starbucks. He understands the culture. Ive had guys 20 years in klein that dont understand the culture. My travel trust sell the ibm because when i see they decided the banks are told thats a communist society. They dont have like the federal reserve. I mean you get a call from the party and its the ibm stuff got to come out, the party is over. Finally i want to get to bob pisani, but kors is 3. 5 . You know what, it is so fricky. Understand tricky. Inventories up 68 versus 49, thank you to stephanie link for giving this to me. The Gross Margins said to be up slightly, did rise 20 basis points. Even kate spade had margins that were down. Its a battleground, david. Its a battleground. Kors is a battle ground. Its a battleground. To bob pisani on the floor has a lot more on what is moving. Bob . Good morning. A little mixed market today but theres been a change in tone. We had a trendless market that complained about it, traders arent making money. A more clear trend in the last few days towards higher cyclical names doing better. Put up the markets in the last five days. You see tech stocks, you see Consumer Discretionary stocks and financials outpassengeerfor. Telecom, and Consumer Staples are lagging the market. A little more of a cyclical tone to the market. The big discussion, though, is whatever happened to volatility. Did you see citigroups comment yesterday trading revenues down 20 to 25 . Jpmorgan said the same thing. To make money you have to have volatility and market trend. Up until recently havent had it. Interest rates lower, derivative volumes are lower, equity fund flows are lower, even the foreign ex guys are lower. Partly the regulators. If you start closing all the prop trading desks theyre major risk takers not here. When you have investigations into everything from Foreign Exchange to libor reduces anybodys willingness to take any risk and trade at all. But i think the Biggest Issue here right now the Economic Data being a lot more mixed. That makes investors a lot more uncertain about what the economy is doing. That reduces the conviction levels and that is whats causing the major pullback that we are seeing right now. Topic right now on the street. Move on and talk about the banks. A lot of people are saying banks have trading problems are also saying, hey, listen, m a activity is very good, ipo activity good, secondary activity is really good, overall and theres a lot of bank bulls out there that have been strong recently on the mixed side today. I want to move on and talk about kors. How eyepopping are the kors numbers. I couldnt believe these numbers. North american revenues up 43 . 43 . Samestore sales up 20 . European revenues up 125 . Samestore sales up 62 . Their guidance for the full year were above street expectations. Take a look at the stock. The stock was what, i dont know, 40 or so. Year and a half ago. Now close to 90. So incredible numbers from kors. Tolls, excellent numbers. Bottom line beat the top and bottom line and still able to raise prices. Nice move up for the home builders. Back to you. Thanks very much, bob pisani. Take a look at shares of allergan. Start there and give you a little more detail. I believe that presentation still going on in midtown, manhattan where valeants Ceo Michael Pearson of course there, the hammer they also have there named bill ackman, bringing the war so to speak, bringing the rain, also presenting. Allergan shares remember its 58. 30 a share in cash, allergan shares down over 3 . The new bid perhaps not as high as some had been anticipating, although they did raise by 10 bucks a share in cash. As you might also expect they are using the opportunity to fire back at what were the first really harsh i would argue allegations from allergan yesterday when it came out and started to really try to undermine valeants Business Model and its stock price for the first time in what is going to be a long running battle. By the way, this thing is going to go on for months. No timeline, nothing going to stop it. They will have a referendum fake annual meeting. Fake annual meeting. Ackman has called for. Thats not going to mean much of anything. Valeant has given them the written opportunity. New bid 5830 and then the cvr of darpin, a quick spin on darpin, this drug, jeffreys saying that theres a less than 50 chance it gets approved, allergan rerunning a trial, next update in a few months. For macular. Yes. Be careful. Need another phase two. I told the ceo, has not taken the gloves up until now because theyve a gent, its a long shot, crowded category and len has this to himself right now with the he will say lieu zen is. Conceivably returning as much as 25 bucks a share. Not getting the market at least according to when jefferys analysts until greers now and 20 billion in sales, wow. Very aggressive. Thats that. Way too aggressive. Valeant clearly the opportunity to respond to allergan from yesterday. You may remember allergans assertion, for example, on any number of things including valeants tax rates saying recent space of acquisitions and restructuring appears to have resulted in multiple offshore tax deferral structures. Right. How about taxing authorities likely to heavily scrutinize and transfer pricing. Valeants response, jim . You do not have multiple deferral structures. Our tax structural is compliant with laws and undergoes the same scrutiny as other public companies. The idea that valeant reports whatever is convenient. Did you love that line . Whatever is convenient. They hate each other. Its a slug fest. Its a thriller in where . What happens if Valeant Canada successful in buying allergan . Theyre unsuccessful . Yes. Valeant needs to do every deal. If you lose the met sa sis products which they made a lot of money for, the facial, you fall back on the bausch lomb, which has been okay. Talk about significant organic growth combatting what is the argument from allergan saying that theyre actually raising prices losing market share. My friend Herb Greenberg right on kors has been saying over and over again, valeant must do deal after deal to keep things rolling. Im close to the met sa sis deal, iced to have shack i used to have shack on all the time, the ceo. One of the things shack did built a company on generic which is the skin but he did have this great franchise that allergan was a eviscerating and piatt knew that and they offloaded to nestle. This is make or break for valeant. In my take. Well be watching all of it closely. I dont know. Joe lets head now to the bond pits and Rick Santelli in chicago. Well, here we are at the center of action. They say that the rally in stocks is most unloved rally. No doubt that rally in treasuries is the most misunderstood. Thats for sure. Ask ten people why, you get 30 different reasons. Maybe the bestp are if theres anybody out there willing to invest billions in the treasury complex or sovereign rates around the globe at these levels, that in and itself almost says it all. Chart of fives, goes back to march of this year, since weve had a yield at this level on a closing basis under 1. 50. Lets look at the 10s. Obviously the benchmark of trade. See the intraday and new low, 2. 46 handle. If you open it up these are fresh lows should we close here, all my comps based on closing levels, would be early july of last year. Were getting closer to one year. Why today on a know day to day. There is a lot of technicals. Goldman story that nobody wants to trade anymore, markets are boring, fully rigged, fully priced and boring. But, but look at the month to date, still technical events going on. Previous low yield close 2. 49. We went through 2. 49 like a hot knife through butter once we violated it. If we look at a 30year bond longest guy in the curve comping back to june of 2013 since weve been ats they sub333 levels on a closing basis. 10s to 2s, i know we had a 2year note action and new 2 year on the block. Today a new 5year on the block. Doesnt dismiss the rollover process validity, 10s minus 2s now the flattest since june of last year. The euro versus the dollar making fresh lows back to early february and maybe the most important one, is the dollar versus the yuan. Testing levels we havent seen since the fall of 2012. David, back to you. Oh, man. That is Serious Movement up there. Up next we are heading out to the west coast. Carls a got a lot more from the code conference in california. Hes right here to tell us whats coming up. Carl . Hey, david. Well talk to kara swisher about day one of the code conference including her ride in the google selfdriving car and what she thought of Satya Nadellas conf comments when we come back from the code conference. [ 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. But with less energy, moodiness, myand a low sex drive, i had to do something. I saw my doctor. A blood test showed it was low testosterone, not age. We talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer, worsening prostate symptoms, decreased sperm count, ankle, feet or body swelling, enlarged or painful breasts, problems breathing while sleeping and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. Ask your doctor about axiron. Fame, makes a man take things over fame, lets him loose, hard to swallow fame, puts you there where things are hollow the evolution of luxury continues. The next generation 2015 escalade. Fame selfdriving cars and contact lenses and more. Sergey brin mentioned some of those in the pipeline at the code conference in california. Kara swisher the coexecutive editor of re code. Congratulations on what is turning out to be an amazing conference. Lots more today. You drove the car . Yes. I didnt drive the car. I not drove the car. Exactly. Your thoughts . I liked it. It felt like a disney ride in a weird way but it was it was nice. You could just sit there and it just went and so it was sort of odd. Like riding in a bus or subway or Something Like that. It felt a little like public transportation. Sergei did talk about in cities when traffic is at a peak a lot is people looking for parking this removings a lot of that. How do you think this is going to play in our daily lives . They will build a couple hundred he said, between 100 and 200. Not going to affect anyones daily lives but interesting if it got out into the wild and they could do these things and use them as fleets of cars. You could see uber being the reservation system. Thats whats interesting about it. It has the sensors not to hit people which is great. Which is interesting. You know, we tried to hit the guy who runs google car selfdriving car and he stood front of the car and it stopped in front of him. Sergei talked about loan loan, other google products. How do you think an investor is supposed to evaluate these things when theyre not going to move this quarter or next year or year after that even. Google science projects and pretty cool. I find some of the others kind of interesting, but i dont know. The car, car is a really interesting area no matter how you slice it, selfdriving cars on the way and google is at the forefront of this experimenting which is interesting. Whos going to make them . Not google. Detroit will or some point. But at the forefront of this thing which is important is i think a very interesting trend. I dont think it will they wont be making cars. Right. Satya nadella, you talked to him last night, talked about his role in microsoft and then the demonstration of this realtime translator. Yes. With skype which satya actually talked about how it gets better over time. Take a listen to this. Not only have we not put facial recognition in glass, but weve actually asked our glassware developers not to put that in. It would be certainly a handy feature especially at a conference like this its just, you know, we also you know, theres a lot that weve bitten off with this project as is and i think the facial recognition is an area that society is still formulating its views on. So theres a hundred other things for us to work on first. All right. Clearly the wrong sound bite but Satya Nadella did speak, i think we have that, guys . What happens is say you teach it english it learns english. Then teach it mandarin, it learns better but becomes better at english. Teach it spanish, good at spanish but great at both mandarin and english and quite frankly none of us know exactly why. Its brainlike in the sense of its capability. Little scary. Your thoughts about that . It was interesting. Talking about big data. Really interesting. I thought it probably didnt get as much attention as the cute car that drives itself but a significant idea, to be able to talk instant fly a phone some day and it translate instantly. This was a crude version, not crude but pretty good. Not the same thing. Over skype. If you got on a phone with someone in, i dont know, in an arab country and able to speak quickly. Change the world. Its interesting. The star trek thing. Once the data gets together its going somewhere. Jam packed day. Well talk to you soon. Kara swisher from re code. Stop trading with jim in a moment. 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Comcast business built for business. Time for cramer and stop trading. Listen up. This is about 3d systems and what has been maybe one of the great retail stories which is this is all about the idea that 3d printing will take over the world. Hewlettpackard did not come in with a [ inaudible ] product. Meg whitman said she may have. Priced 5. 95 million shares at 53. 25. The print did not hold. Why did it not hold . Gigantic short position in 3d and this loosens the short. My favorite is stratasys, better industrial name. Be careful retail. I know you love 3d. I know you will come after me at jim cate cramer. I dont care. Thats what i like to hear. Not good. 53. 25. Break print it means that squeeze is being broken. Okay. Theyre going to do it for acquisitions. Thats why i like stratasys. The public is way too long with 3d systems. What do we have on mad money . Coal tonight, union pacific. Brand new facilitypy. Nick has been remarkable. 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Making new york state number two in the nation in new private sector job creation. With 10 Regional Development strategies to fit your business needs. And now its even better because theyve introduced startup new york. With the state creating dozens of taxfree zones where businesses pay no taxes for ten years. Become the next business to discover the new new york. [ male announcer ] see if your business qualifies. Our road map starts with google. The tech giant making headlines at the code Conference Unveiling its driverless car. Former gm executive bob hurts will weigh in on what it means now. Morgan stanleys chief u. S. Equity strategist adam parker tells us where we should be investing. Miking kors seeing a boost in revenue but its a struggling stock. Well break down the fourthquarter results. Live from the first ever code conference in ranch cho pal los ver des california. Our heavy hitter Carl Quintanilla is there with Driverless Cars. Thank goodness theres not driverless shows. It has been an amazing day one of the code conference. The driverless car out of google. Satya nadella demonstrating that realtime language translator out of skype. Todays the day its going to get interesting. Some of the speakers coming up later this morning here in rancho pal less ver daes, travis kalanick, jimmy i owe vin and massa son. An here on cnbc our boss, the chairman and ceo of comcast, Brian Roberts, a day after the New York Times Editorial Board comes out against that wouldbe merger or takeover of Time Warner Cable. Well talk to brian how hes trying to sell that deal. Thats coming up later on. The driverless car, phil lebeau will talk with lutz and others about what that might mean for traffic around the country. Back to you. Everyone is talking about it over there. Carl, good to see you. Looking good out there. Tieless in california. Check back in with you. The dow in the red, s p 500 also lower, but were Still Holding near record highs. Lets talk about it with adam parker with morgan stanley. Youre optimistic. You say the markets are headed higher even though we counted 12th record high of 2014 yeah. Our base case we grind higher, end the year at our price target of 2014. We see earnings improving and think the fed remains, so thats a good backdrop for equities. Explain why the 10year yield this morning hit the lowest level since last july . Well, you know, our Interest Rate manager covers the 10year, his view is that, you know, theres been tactical and positioning issues around that. My view is that earnings are growing, my view is that while the economy is improving, going to improve less than the consensus expectations and if the fed stays accommodative thats a good scenario. I dont think the base case is that great, sara. I think its more that the bear case isnt that likely. Equities can do well as long as people dont see a high probability of the bear case forming. Something important is happening here. Somebody described the markets in this country as zenlike overnight. Its this steady okay, maybe it is a steadily rising market but you are in a position where some of the big investors have retreated to the sidelines, not getting the big bets, the volatili volatility. People may not care citis trading revenue according to the cfo may be down 20 on the quarter like jpmorgans but should they care that some of those very big bets have gone wrong if notably, of course, as far as sara references on the bond market, the fact that yields are moving in the wrong direction. If you were looking for economic recovery. Yeah, sure. I mean look, historically to get a higher p e or price to earnings ratio for the s p from these levels you want higher real yields. You want the economy to improve. You want that improvement without cpi. Thats a good backdrop for multiple expansion. We saw some of that in 2013. I think its pausing out right here. You know, look, i dont really talk very much about the s p level when i talk to investors all day long. We talk much more about whats going on underneath the growth rotation or small cap or, you know, whats happening with at the sector or an industry level. Theres been a lot of volatility underneath the market even though the s p level just keeps melting higher. So i mean what is in terms of volumes, do you feel that this is the calm before the storm or do you feel that something is fundamentally changing . Did you see out in the global trade is slowing down. Quite a sharp contraction in the First Quarter down 2. 6 . In an environment where as we learned yesterday, house prices are no longer accelerating as they were. Something is going on. Surely. No, i agree. I think the economy is improving at a rapid rate than people suspect. Were also tapering. Thats a big difference. You dont hear people focusing on it much. The big difference between this year and where we were a year ago, a year ago we called it the hall pass. That good Economic News was good for the market, bad Economic News was good for the market because there would be more qe. Thats 2013. I think now its different. Good news is going to be good, but bad news is going to be bad. I think that difference is because were tapering and dont see what the incremental accommodation could be from the fed theres a different tenor. Thats right. The earth has rotated back to normal axis or whatever. I want to mention, volatility, which remains remarkably low. Citigroup talking about this yesterday. The cfo warning about a drop in trading revenues, all the banks are talking ability how the investor is uncertain. Is anyone making money off of this record run in stocks . I think people are definitely making money off the run at stocks, sara. I think underneath that, it depends what your bets were but the reason the volatility is low, all the questions i get if i think about it, can the fed act early, u. S. Economy impro improving, is europe improve be, china hard landing, every question is really what could introduce volatility into the earnings estimates. Because as long as the earnings estimates you cant see whats going to make them go down very much, what i toll you is the s p never goes down by 10 unless people are afraid of an earnings recession. I dont see maybe thats consensus but i dont see what causes a big correction in earnings in the second half of the year. You Like Technology . Sorry . I want to ask you quickly in the time left about technology. The nasdaq back near 13year high, looks like tech names are back in favor like the apples and facebooks of the world. Do you like that sector . We have ap been recommending on the growth Side Software in particular, particularly relative to growth, names in consumer. I think the Software Companies are where companies are investing. Not hiring and not doing ppe. Theyre investing in property activity. In tech we like software, sara. All right. Adam, good to check in with you on these markets. 2014. Good to see you. Yearend target on the s p. Adam parker of morgan stanley. Bye. Googles driverless car is getting buzz this morning. Lets get perspective from bob, the former vice chairman of General Motors. He joins us on the news line as we play the pictures out for people who havent been able to see the car. Welcome to the show. Bob, can you hear me, bob lutz, are you there with us . We couldndont seem to have bob. A market flash with dom chu. Okay. So lets talk about whats happening with two Shoe Companies walking in opposite directions. First of all dsw shares moving lower after weaker than expected firstquarter results. Citing what else, bad weather and the aggressively promotional environment. The stock is currently at least up about 10 here. A different story for brown shoe, up 10 , posted better than expected First Quarter earnings driven by athletic shoes, as a result raised 2014 and 2015 guidance going the opposite direction up about 10 in todays trade. Very interesting on the earnings side of things when you see the dichotomy, the separation. Something that perhaps adam parker was speaking about. Back over to you guys. All right. Thanks, dom. Up next, live from the code conference, the chairman and ceo of our Parent Company, comcast, Brian Roberts. Hell sit down with carl and julia in california. Squawk on the street will be right back. Female narrator through sunday, its posturepedic through sunday, its posturepedic versus beautyrest with up to 400 off. Serta icomfort and tempurpedic go headtohead with three years interestfree financing. Mattress price wars end sunday at sleep train. Your ticket to a better nights sleep googles driveless car getting buzz this morning. Back to bob lutz former vice chairman of General Motors. I can hear you fine. Great to have you on the program. We should explain to people just tuning in this is a real important departure, this is not a conventional automobile where humans can suddenly take control if something goes wrong. This has no Steering Wheel, no pedals, totally auto mow mated. The human completely out of the loop. What do you make of what you see now . Well, i think its very impressive, but basically its just a bundling of technologies that have been around for about 10 or 15 years. Gm and other companies have demonstrated a Driverless Cars to the Defense Advanced Research project agencies for years. Whats happening is all of the stuff is becoming more reliable, its becoming somewhat less expensive, although lets face it, those google cars still have some components in them that would raise the price to 200 or 300,000. Its not exactly affordable yet. No, all the technology definitely works and you can say well, will one of these Driverless Cars ever malfunction and have a crash . The answer is yes. Will people continue to be killed . The answer is yes. But, the other part of the answer is, probably 1 20 as much due to human error now and especially the global youth, unfortunately, global youth of alcohol while driving which is probably the cause of most accidents that driverless car will not do that. So i mean, what is the commerce small demand here do you think . Clearly the price is going to come down. Thats what always happens. I can imagine a lot of rich people, a lot of airports or private estates or people that basically if theyve got a route they want to take people by the spa to the lodging area would want this now. Well, they cant have it now because its not reliable enough and it does, to some extent, depend on knowing where all the other cars are. And one of the things thats going to happen has to happen is, all cars at some point are going to have to be transponder equipped like all aircraft are. With that technology, every airplane knows where every other airplane is. Thats essential for a network of Driverless Cars. Nobody is expecting this for another ten years, maybe 15 years or 20 years. And it will probably start with large urban fleets like taxi fleets or mail delivery and stuff like that. But we do have to you do have to be conscious of the fact that there are still things that this car cannot do. Right. It cant recognize signs. You know, for instance, youre driving past some place and it says puppy for sale, take next exit. The car will not be be able to read puppies for sale. It cannot read hand signals from drivers. Somebody stuck in an intersection and their car has stalled and they wave you through the intersection with their hand, the driverless car cant sense that. If theres a human policeman as there often are at crash sites and stuff like that, it does not know how to read human hand signals. So tss still a lot of things that have to be perfected but make no mistake about it, 25 or 30 years from now, all of the major highways will be automated and these fleets of Driverless Cars with very minimal nose to tail difference, almost like a railroad train, will be moving sorry. Bob, i dont mean to cut you off but if that is the vision and you dont seem that impressed with the technology and innovations in this, why is it coming out of silicon valley, out of google . Why not detroit, General Motors or ford . Why arent they coming out with this kind of innovation. Wait a minute. Detroit always makes cars. Detroit does not make the technology that goes into the cars. Like advance braking systems from brake suppliers. Advanced fuel Injection Systems come from bosh or nipupon. The Automobile Industry has always taken the technology from suppliers and integrated it into cars. Google isnt going to make cars. Sure. Google is going to supply this stuff to the automobile makers. Sure. Bob, weve not heard from you since all the trouble broke out at General Motors, your former employer. I think were now at 14 million vehicles that have been recalled by gm. What color can you give us if what is your position . What are you able to say to us . First of all, with despite the space of recalls which i think what General Motors is doing is theyre cleaning out the drawer, and just looking at everything that might some day be a safety related recall and just saying look, lets get it behind us, lets just recall everything. And that way we know we wont have any more problems. Secondly, even with that, General Motors is by no means at the top of the recall heap. Theres still sort of in the middle of the pack when it comes to percentage of cars recalled. Thirdly, this is an issue that seems to captivate the media, but the u. S. Public absolutely couldnt care less. Theres very low Public Awareness of recalls anymore. And from what i here from the guys back at the company is it hasnt affected sales one bit. So if you have one piece of advice for mary barra what would it be in. To whom . Mary barra . Oh. Be tough and say what you think and at the face of tough questioning when you have to, bite back. Dont just sit there and take it. Good to talk to youp. Thank you for your time. Bob lutz joining us there. Former vice chairman of General Motors. We want to show you live pictures right now at the United States military academy at west point where president obama is about to deliver the commencement address. The president set to use todays speech to lay out a Foreign Policy vision for his final 2 1 2 years in office. Over to carl and julia at the code conference for a very important guest. Guys . All right. Thank you so much, simon. Would comcast 45 billion takeover of Time Warner Cable give the company too much power . At least over the nations cable and broadband markets . The argument made by the New York Times Editorial Board yesterday as to why the deal in their view should be blocked by federal regulators. Joining us a the code conference is Brian Roberts the chairman and ceo of comcast the Parent Company of Nbc Universal and nns. Julia joins you and nbc. Julia joins us as well. The kind is going to create a cohas sis since the break jun of at t. Did selling this deal get more difficult . I dont think so. Theyre entitled to an opinion. They got a lot of facts i think they didnt look at right in the days of at t that was one phone company. Its truly an antiquated notion to say theres no competition in video. Weve lost video customers for 26 straight quarters until two quarters ago from satellite, directv, dish network, verizon, at t and fios and uverse. People who are core cutting. A changing space never been moving faster, and i think that they were looking at the wrong thing. The washington post, chicago tribune, all had a different point of view. Theyre entitled to their snoon so much opposition centers on the idea that you controlling so much broadband access, bad for the little guy, for startups. What are they getting wrong . First of all, both in video and in broadband we dont compete with time warner. We have to start with that fundamental point. Were in philadelphia. Theyre in l. A. , were in san francisco. You cant buy a comcast in new york, cant buy a time warner in philadelphia. So theres no reduction in competition. In broadband or in television. Secondly, you have federal rules around the business in broadband and were going through the open internet question. We support an open internet and having rules that the right kind of rules that are legally enforceable and allow for investment and innovation and give consumers great confidence they can do what they want to do and never going to be slowed down, never going to be blocked. Some of the things weve read squaring people has not ever been how weve had our successful business selling broadband. Finally we have too much broadband. Again you cant buy a comcast broadband in new york. The total of this transaction is that were going to go to about 29 market share, lets use video, we were there before. About ten years ago. With the competition weve come back to 22. The courts have looked at this question and said if youre less than 30 , thats what the fcc wanted. Thats even too low of a standard. And in broadband i think there is no National Broadband market. Its a local market. We have competition from the phone company, clearly wireless and wifi and google fiber and other innovation. If we work at our company all were worried about is competition, competition improving. Weve increased 13 times in 12 years and dont think there should be an issue with going 7 million customers bigger. Reed hastings is here. Netflix pays you for some access. At the same time it says this deal would give you anticompetitive leverage. Have you talked to him . Where does that conversation stand . We have talked to him and weve had an agreement between the two companies which we did five days after we announced Time Warner Cable. The information seemed at the time he put out positive statement ps its a fundamental business dispute. He would like all of his traffic not the connectivity, but just the transit, the cdms they call it, content delivery networks, to the open internet. That first part the first mile, not the last mile, he would like that all for free. Hes been paying other carriers to do it for him. Every other major traffic provider uses transit or somehow pays someone to get it to the open internet. And, of course, he would like it for free. Its a business dis putt. Who wouldnt like it for free. You used to pay the post office three quarters of a billion dollars to send dvds around and theyre used to wanting it to now be free. The other hand, we dont want to charge netflix different than any other company but they do amount to a third of all the bits on the internet. We want to provide great experiences for our customers and we have to manage that traffic together with them and the deal that we made was they reduced their expenses generally speaking over the life of the agreement and speed up the experience getting it to the internet. So customer performance is better, theyve saved money. Im not sure why that isnt in everyones interest. Now were in the midst of this debate about Net Neutrality. Were in the midst of figuring out what the Net Neutrality rules should look like. Reed hastings says your behavior has been antiNet Neutrality, although obviously you debate that. Now comcast has agreed to comply with the old rules for several years but what do you want the new rules to look like . Eventually it will impact you. When they wrote the old rules, to make sure the viewers know what were talking about for the open internet 20, 10, the fcc put out rules for the open internet and we supported those rules. So much so when we bought Nbc Universal we were asked would you agree to the rules even while challenged in court and we said yes, through 2018. When the rules were challenged in court by verizon, which we did not challenge those rules, they have remanded it back to the fcc to clarify certain areas. Weve said we would like to work with the fcc to have clarity for consumers is important, support openness, we want people to really know theres teeth in that sfns. And at the same time we dont want to go so far to a type of regulation that some have advocated that would be like the 100 year old phone monopoly where the rules were written 100 plus years ago and can regulate every part of your business. These are industries changing so fast. Americas competitiveness, small businesses, innovation, have all relied on the internet and improvements in innovation constantly getting better. To regulate it like a phone company that was the only provider ignores the reality of this industry in my opinion and many others and weve said that Time Warner Cable, if we complete the transaction, will be under our commitment to open internet through 2018, once again giving chance for the government to put in new rules, hopefully the same types of rules that calm this debate, theres not a problem, this is only exist because there was a court ruling. No one has accused Different Companies of behaviors. I dont believe in violating any rules. Theres not a problem here. It was important to get Something Back in place that everyone can feel good about and thats what we hope to happen. If im a regulatoregulator, at t directv deal make me more happy about yours because theres another Strong Player or is it too much too fast and dont want to talk about that . I dont want to comment on their transaction except i would say confirms its a constantly changing area. Time warner was in play, dropped cbs, lost cable customers, charter was running a host still slate to buy the company and something was going to happen. It was can we go from being a Regional Company which is what comcast is, my dad started comcast 50 years ago, 30,000 communities, each community got a cable license. No business before or since has been started that way the geography today is the cloud. You click amazon go anywhere, go to google go anywhere. You go to, you know, facebook all over the world and here were not in new york and not in los angeles. We took a look at this situation and said, becoming more of a Natural Company was a great onceinalifetime opportunity with time warner for the First Time Ever putting those markets for sale and secondly, that we would be under this 30 . And so we looked at our competition directv which at t is buying and every home in america can get directv so when they want to get a program like sunday ticket, everybody nfl knows what everyone can now see my programming. If you only sell it to comcast, what about time warner . In a world where you see lots of competition having more of a National Footprint not the 50yearold regional footprint was important to us. The case of at t and directv theyll make their own case of why theyre trying to do this but confirms for me businesses dont stand still, markets evolve, competition is clearly robust and im glad were going to make the case and hopefully make this deal happen. When it comes to broadband i understand youre experimenting with usage based pricing, bad news for netflix users. How do you roll that out without frustrating users who dont want to pay more. We have experimented in two or three markets with some usage based pricing. Obviously the notion that we dont want to frustrate customers. Weve gotten rid of any kind of cap and we are looking for ways to share the cost of this network. Its exploding, 30 to 40 increase in the amount of bits people consume every year for 20 compounded years in a row and probably the next 20 years. Thats an exciting highclass opportunity and well keep experimenting but at the moment we dont have new news on that kind of pricing. Finally, should end on a note, x 1 is a hit, right. The olympics through 2032. Nbc number one for the first time in ten years. Yeah. Does is everything the time warner deal, does it make Everything Else thats going well make it too noisy or not . We knew it would have lots of review and, you know, we built this company at different moments over 50 years. My father, myself, a lot of great people who have worked at the company to give ourselves an opportunity to try to keep innovating and competing. Be here for 50 more years. I would like to say to people, you know, do you know what the future is . I surely am not sure. So you try to get smart people and lots of diversified assets. In the case of Nbc Universal things could not be going better. Steve burk and his team, and neil smith and mike who helped us put this transaction toegs, a Wonderful Team of people. At Nbc Universal we completed number one for the first time in a decade. We have had wonderful run at universal pictures, fay bores ca neighbors came out a couple weeks ago. Universal theme parks opening, harry potter 2 this summer, largest new hotel in north ameri america, the cable channels, usa, and the olympics draws it all together. To have the International Olympic Committee Award us the games by saying this is the company we prefer to do business with, were not going to have an auction, just going to renew with you for an unprecedented amount of time, through 2032, profitable in sochi, in london, so with a 1 increase in costs through 2032, which is what the deal works out to, were going to have a great run, invest in the olympics, in technology, exciting time to be at the kem. You got a lot going on. Not to mention your presentation at the code conference today. Brian, thanks for stopping by. Thank you, guys. Brian roberts, chairman and ceo of comcast. Simon, over to you. More big interviews to come. Back to the markets, the dow is down 38, but copper is making new highs. Dom chus that. A commodity we want to watch. Proxy for global growth. Copper prices hovering near three month highs here. The metal supported by optimism over the outlook for demand from, of course, china one of the biggest consumers in the world of that metal. Really a modest recovery in chinese manufacturing is suggesting that factories have begun at least gaining some steam. Utilization rates at chinas major cable makers, users of copper, are bpicking up accordig to barclays analyst. Sentiment boosted by yesterdays upbeat u. S. Durable goods report. Copper shares up marginally, down slightly over the past three months. A nice optimistic view if youre looking for that bullish sentiment at least in one part of the market. Sara, back over to you guys. Thanks very much. Bullish signals from dr. Copper. Thanks. Straight ahead, luxury shoppers snapping up accessories and watches. Michael kors, giving that company a revenue boost in the fourth quarter. Comp store sales up more than 25 . Why is the stock struggling today . More on that when we come back. The Performance Review. 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. Shares of the luxury retailer michael kors are slightly higher after you can see wild swings earlier in the session. One point up 5 better than expected quarterly results. Bring in cnbcs retail analyst saysy widlets of sw retail advisors. Good to have you back. What do you think about coursko why the swings in. The results came out, comps in north america are up over 20 , over 60 in europe. That sent the stock up. But then like any good high multiple stock, this company starts talking about normalization of the business and the street is waiting for that to happen which means margins will come down eventually. That hasnt happened yet but thats the elephant in the room. Thats what the real discussion was on the Conference Call today and pressured the stock. Because in essence, any company that has grown as fast as michael kors has, is going to mature the theory is, much more rapidly than would normally have been the case and at what point does that kick in seems to be the debate. Exactly. What is your view . Where are you on that . You know, you look at north america an the awareness here is almost about 90 for the consumers and if you look at whats been happening, stealing share from coach, we know that. Coach comps down 20 , kors up 20 . I think at this point, now that you are looking at that normalization potentially of the business, you are going to see Gross Margins come in, so i think at this point the stock is fully priced here, fully valued. Lets not underestimate what michael kors has managed to do given the retail investment, between the weather retail environment, between the competition, customers habits has been expanding but how has michael kors managed to dominate this category of affordable luxury not just in the u. S. But europe, home of gucci and the fashion designs. Theyve done a terrific job with making this a lifestyle brand and taking share away from the likes of coach but if you why to have been these luxury you have to remember these Luxury Brands have been raising prices 20 every year. So theres this space in the middle for accessible luxury 200, 300 bags and doing the best job out there in terms of in that space. So thats why theyve been doing so well. But at this point you have to worry about, you know, over expansion, see bags just about everywhere on the street, and theres probably more opportunity in europe right now than there is really in north america. And what about the other half of the population, stacy . Theyre on record as saying look, were going to expand our mens clothing. Its exactly as the same youre hearing from burberry. Is that not a potentially new dawn for them, just not as profitab profitable . Sure. Everyone eventually goes moo the mens business. Coach went down that road. Sure, they like to have a trajectory of a growth path and explore all avenues which is why theyre going and expanding in jewelry and other categories to make sure they have the growth trajectory. The base business, the core of the business is womens accessories and, you know, theyre in the sweet spot of the price points. So stacy, if you think this stock is fairly valued, what is your favorite stock at the moment . What should people buy . My favorite stock right now is tjx. T. J. Maxx. You look at the price channel, theyre gaining share. They have significant store growth not only in north america but europe. Its a huge opportunity. A completely untapped space. And theyre the only player over there. So thats what i would be looking at now, particularly after a very tough First Quarter in retail where all these stocks really have come down quite a bit. Youre telling us. Thank you. Stacy widlits joining us from sw retail advisers. The other big story everyone is talking about google cofounder sergey brin making a splash, revealing google has been designing and building a fleet of electric powered selfdriving cars. We took a look from the ground up as to what would it be like if we had selfdriving cars in the world and what should they be like and weve been building prototypes of that. And, of course, they revealed the images. There they are. Pretty cute. Selfdriving prototype car, brin says google plans to build a few hundred of these prototypes, Start Testing the vehicle with safety drivers by the end of 2014. Joining us now, john linkov, managing editor for autos at consumer reports, and phil lebeau, our auto reporter. John, consumer reports, youre looking at the safety, going to have to review these cars one time or another and the efficiency of the cars. From what you hear what do you make of them. It seems that google will look at using taxis first of all and something to help mobility for people who dont have access to cars in an urban setting. You know, im not really buying into it that theyre going to have it immediately, maybe ten years. Maybe my 2 and 4yearold will be in these. When technology does fail whats going to happen with a car that doesnt have any ability to control it . And phil, i wonder how its reverberate pg in your world of the giant automakers . We dont know if google will sell the software behind this or make these cars themselves. How is it playing out . Everybodys working on this right now, sara. You have to understand in the Auto Industry they realize that automated cars are coming in some fashion. Maybe not fully automated as were seeing with the new prototype that were being taking a look at from google. Keep in mind, the biggest hurdle for these vehicles to get out on the road are regulators. Do you think the state dmvs will authorize a car for people to buy when no Steering Wheel, brake, gas pedals. They will be hesitant to allow you and i to get behind the in the front seat of a vehicle that if theres an emergency, there is no way for us to stop the vehicle. You cant stay behind the wheel. The biggest hurdle. There is no behind the wheel. No behind the wheel. I wonder, part of Google Googles plan to make a safer car. The sensors would be able to pick up, for instance, more than a human would be able to pick up signals or dangers ahead. John, do you think they can make a convincing case this would be safer . They talk about how its going to be reading lines, its going to be reading the traffic lights, et cetera. When a road gets repaved and lines arent there you cant use that road anymore. What if thats your destination. Its a proof of concept. They will try to sell it other manufacturers. Look at tesla, having a heck of a time trying to sell cars on their own. Google doesnt want to get into that. Thats a money waster. You guys have been very pessimistic here. You know, youre framing it to the nth degree. Saying can they get on the road now and will it work. There are markets, john, loads in which i dont have control of the transportation im in. When i go to the airport and they take me in one of these trains across the skies. To the Adventure Park and certain private estates i might be in a vehicle i have no control over. Thats a huge market potentially. These things have novelty, theyre smart, they will raises the profile of wherever they are. Even if theyre just going around parts of an estate to take me to the spa, there is a market for that if they can mass produce them. A small market. Certainly a market. Go ahead, john. That will allow people who dont have mobility option, the elderly, the inferm. You can drive a lexus, bmw, audi, many cars right now that will have these features that allow you to selfdrive to an extent. The technology is there. To go to a car that nobody has a Steering Wheel p no control and relying on the technology to not fail, even the Redundant Technology to not fail, thats a huge step and were not at the jetson stage yet. Let me add one quick thing. You and i have talked about and others who have covered the Auto Industry, the bottom line is this, at the end of the day, these vehicles were going to see gradual automation examining into vehicles. Everybody has said that. Cars los said they expect that by the end of this decade well see some automation in vehicles. You are never going to see a day i shouldnt say never. Unlikely youll see any time soon a vehicle that does not have a Steering Wheel. State regulators will look at this and say there is potential there but i want people to have that option to take control of the vehicle. I find it fascinating as an observer at the edge the way in which old detroit, old automobile and bob lutz prime example from gm on this show in this hour, have been so aggressively negative about what seems like its not negative. Its realistic. For this country its realistic. Its the reality of the way people are. I dont trust the human driver or human occupant to just sit and let a car go. When done playing, you know, clash of clans because the car fails, then what do they do . Im a pretty terrible driver myself and im looking forward to it. I think it would be safer to have me not at the wheel and i dont think im alone. It is a debate well talk about it. Thanks for joining us on googles driverless car. Still ahead, valeant adding more cash to its offer to buy allergan. The bid could be worth more than 50 billion. Well take you live to the valeant investor meeting after the break. Oh my god look. You need to see this. Show em the curve. Do you know what this means . The greater the curvature, the bigger the difference. [scifi tractor beam sound]. Sucked me right in. Its beautiful. Gotta admit one thing. Cant beat the view. Introducing the worlds first curved Ultra High Definition Television from samsung. [ cows moo ] [ sizzling ] more rain. [ thunder rumbles ] [ male announcer ] when the world moves. Futures move first. Learn futures from experienced pros with dedicated chats and daily live webinars. And trade with papermoney to testdrive the market. All on thinkorswim from td ameritrade. All on thinkorswim in a we believe outshining the competition tomorrow requires 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. Alright, that should just about do it. Excuse me, what are you doing . Uh, well we are fine tuning these small cells that improve coverage, capacity and quality of the network. It means youll be able t post from the breakroom. Great did it hurt . When you fell from heaven awkward laugh . A little. laughs im sorry, i have to go. At t is building you a better network. 245 on the tenyear yield, an intraday low. We have to go to chicago. Rick santelli with the santelli exchange. Good morning, rick. Good morning, sara. Indeed, i see two 2. 44 now. Everything i do on a comparison basis is always based on closing levels. So at 2. 44, if we were to close right here, it would be the lowest yield close since june 20th of last year. So we were initially in july, we keep comping back farther and farther. You know the drill plp treasuries are really augering that something is fishy in the Global Economy. And i agree. But i think whats fishy is a red herring. Theres so many red herrings out there. Its amazing to me that we have a Global Economy thats calibrated in managing things like rates down to very low levels, predicated on the back of much debt, and yet we can look at it equity market, globally, whether its the dax or the dow or the s p, or the french stock market, we can see that they go up, but the amount of kicking the tires with regard to that activity, is minimal, even though we know that there are earnings discussions to have that may be simpler than trying to dissect whats going on with rates but we are calibrated for virtually extremely low Interest Rates and, of course, that makes a huge difference in the earning power of corporations. But maybe the key is, were in a Global Economy. I dont care what anybody says, it seems pretty hard for me to understand that the ecb on one hand thinks things are okay, but theyre talking about more stimulus, theyre talking about lower rates, and everything in the u. S. Is peachy. No. Doesnt work that way. I think one of the biggest red herrings by far the biggest red herring is deflation. This is the red herring of all red herrings. It isnt like 1932 and 1933 where we see 30 drops in gdp, 25 unemployment and real deflation thats chronic and systemic. We have bouts with small amounts of it. Theyre going to make this in the ecb the king pin. The keynesians have failed. You cant make everything right by managing it and turning straw. A real market emerges. So whether its belgium or whets buying treasuries make it china. Lets put the strands together. We see the china currency continues to weaken. We see whats going on in the ecb as we get closer to june 5. We saw the unemployment pop up 24,000 in germany, one of the biggest monthovermonth pops since 09. With the u. S. Its were relatively strong, were stronger than they are it doesnt matter from a global standpoint, well continue to see Central Banks think they control all the pieces, but they cant. Howday know . Just look at treasuries. Back to you. Thank you very much, Interesting Times to say the least. Coming up on the show, carl is talking to linkedin ceo jeff wiener. Thats exactly right, simon and sarah, julie and i are going to talk to jeff in a moment. Were asking viewers to tweet us your questions for the linkedin ceo, at asklinkedin. Well be right back. [ male announcer ] this is kevin. To prove to you that aleve is the better choice for him, hes agreed to give it up. Thats today . [ male announcer ] well be with him all day as he goes back to taking tylenol. I was okay, but after lunch my knee started to hurt again. And now ive got to take more pills. Yup. Another pill stop. Can i get my aleve back yet . For my pain, i want my aleve. [ male announcer ] look for the easyopen red arthritis cap. 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. 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. For the botox maker allergan. Now being worth more than 50 billion. Valeant holds a public investors meeting and were live with the latest. Good morning, meg. Good morning, simon. So were just inside for this investor meeting has been going since 8 00 amt. The ceo mike pearson and his team make the case for why the raised bid for allergan make sense. Valeants business mod sl unsustainable. That its growth comes from price increases rather than selling more products and it doesnt know how to manage Global Brands like ailer agains. Valiant is offering a contingent value writer, tied to a pipeline asset for macular degeneration. However, both companys stocks are down and an analyst i was talking to said allergan shareholders may be looking for a higher price per share, now were looking at 166 at the raised bid. Maybe the down stocks indicate investors are a little less, expecting for the deal to go through. Sarah . Well, turning into quite the soap op raeropera. Thank you for the update. Coming up on squawk alley an allstar line up live from the code conference in california. Former ceo of the huffington post, eric hippeau will weigh in on the future of media well be right back. Hi, are we still on for tomorrow . Tomorrow. Quick look at the weather. Nice day, beautiful tomorrow. Tomorrow is full of promise. We can come back tomorrrow. And we promise to keep it that way. 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If you have any sudden decrease or loss in hearing or vision, or any allergic reactions like rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a free 30tablet trial. Straight talk from guest host ken langione and cuttingedge tech tomorrow on cnbc. Were looking at flat equity markets, simon, thats what everyone is watching, the 10year note yield and the 30year note yeemd. Were seeing fresh lows during the session. The 30year yield lowest since june 2013 and the 10year the lowest since last july. Whats it telling us in the face of a recordhigh stock market and seemingly improving Economic Data. Rick santorum talking about it. And were watching it. A lot of people buy treasuries for the asset appreciation. They dont always buy it on yield. So people are making money in that trade. Lets be clear. A lot of people got hurt very badly. But theyre making money within the trade. Yes, as the price continues to run even higher. And the dow down 34 points. The s p holding near a record. Were out of time on this program, lets send it over to squawk alley live from the code conference in california, take it away, carl. Thanks so much, simon. Its 8 00 a. M. At code conference, in rancho pal palos verde in california and squawk alley is live. Good morning, were broadcasting live from the inaugural code conference in rancho palos verde, california where cnbc is providing exclusive coverage throughout the day joining us this morning our own john ford talking about technology in front of an incredible vista overlooking the pacific ocean. Youve been up for six hours, recapping what we saw here yesterday. Yeah. Yeah. Has it only been six hours . Because it feels like a lot longer than that. But sergei brim, gen ewynneth paltrow. All three different, but driverless car designed by google, Microsofts Skype translation service. Which some people in the audience who speak german said isnt quite ready for business conversations