Transcripts For CNBC Squawk On The Street 20140331

Consumer inflation missed estimates. Europe, you can see, is in the green. The question everybodys talking about today, is the stock market rigged . Well go behind the explosive headline, bring you some answers. Plus, it is the final trading day of the First Quarter. So far this year, one exchange has performed a lot worse than the others. I bet you know which one it is. And things keep looking worse for general motors, ahead of ceos mary barras testimony on capitol hill this week. Why did it take federal regulators and gm over a decade to order the recall . Well try to get answers. First up, a comment causing a lot of buzz today. Best selling author Michael Lewis with harsh words about the stock market last night on 60 minutes take a listen. The stock markets rigged. The United States stock market, the most iconic market in global capitalism is rigged by whom. A combination the stock exchanges, the big wall street banks and High Frequency traders. Big, important words for a mainstream audience last night in america. Our audience is a little bit different but turning to us and saying, okay, what does the Financial Network of the country have to say about that . Shortterm, i dont want to use the word rigged, but short termed, theres a lot of people who are able to get ahead of others in an order and take advantage of their speed. If that is rigging, then it is true. Has been true for a long time . Well, i like michael i like his books. I think that they explain a lot of things that people didnt understand before. But weve sat here for a long time. I was on the at cnbc headquarters when the flash crash occurred and it was a High Frequency traders that caused that and we railed against them, and exposed them over and over. I had maybe 100 shows devoted to it on mad money saying its wrong, saying basically it is rigged without using the word rigged. Its interesting it got on 60 minutes with a powerful author, and people are shocked. As you point out, something weve talked about many times here, right from the floor of the New York Stock Exchange. Effective way to sell books new york doubt, for an author, who you say, extraordinarily popular, franchise unlike any others when it comes to business books. To be fair, one of the best storytellers in american journalism. The books are good. The books are good. Without a doubt. When it comes to High Frequency trading, youve spoke been it many times, we have, bob pisani has done a great deal of work himself, there is and there are many critics, leon cooperman, marvin schwartz. Mark cuban. Right. Who have spoken about it many times who want to see something and say it is, it is hurting integrity of the markets. It is. But the exchanges stand behind it because they need sources of revenue. S. E. C. , behind the scenes, they dont care about it. They dont care. Its just not important. Maybe this can change things. They introduced a fellow, new exchange coming that looks like its harder to rig, so to speak. But there is nothing new here. It has been allowed. There has been front running, its electronic front running. One of the great moments in interview steve kroft said, isnt that illegal . Michael said, no, its legal front running. How can that be . Isnt it crazy . Your government has blessed. Your government thinks its good. Its your government. Its government as good as youre going to get and they dont care. Talking milliseconds but it can add up to a few cents here and there over time. Which sort of makes begs for comparisons about the kinds of spreads that marketmakers took 20, 30, 40 years ago. Right. Heres the let me give you the High Frequency first, we provide im going to be one of then you dont know what youre talking about, always starts like that. If you did work, Michael Lewis, you would know its not true. You havent done any work. But if you did work, you would discover we provide a lot of liquidity. Liquidity is good, if you look at old days there wasnt enough liquidity. Were the good guys. Youre not an informed joker and its ashame how stupid you are, but youll sell a lot of beaks and when its over, it will go back to the way it was, and were the good guys. We create a deeper market than otherwise would be the case. Right. And then you go on. It goes on from there. And they win. Theres a lot of them. Look around. I was going to take a picture of a guy today, were all algos, were able to front run. Step back for a second. Youre an individual and thinking about buying microsoft today, it is not going to impact you. Youre not being ripped off on your 100 shares. Im just saying, dont run your life as if the market is rigged for you. But, there will be more people who leave the casino again. Or people who choose not to participate, the same who may not have for larger reasons, the market went down for a long time and previously been hurt. Marginal excuse, not to invest. Maybe, it is Michael Lewis, maybe the s. E. C. Does more than trot out a commissioner to make a speech. Theyll have hearings. Theyll have hearings. Theyve done that before. And youll see a parade of people who will say that the s. E. C. Doesnt know what its talking about. I want im waiting for the Smear Campaign of Michael Lewis. I think it goes like this, he ought to stick with football, that blindside was a very good book. You know what, he never advanced at solomon brothers. The reason he wrote the book, he was not able to pass stanley. And the big aha, that was money. Moneyball. Ought to stick with baseball. Or stick with todays opening day. Todays opening day. The phillies and the mets havent lost yet. No. You think Michael Lewis talks about that . No. You think he talks about Desean Jackson . No. Michael lewis should talk about thing his knows about and not High Frequency trading because he knows nothing. Did i do good . A good imitation of what they do . Yes. If we ever if we attacked them, oh, were all so stupid. We went to college to get stupid. Who said that . You sound like you speak from experience. The godfather. Ive tried for years to defrock these guys and you cant because they just theres just they have a lot of divisions. They have many divisions, meaning military divisions. When you go up against them, they will flatten you. Michael lewis has 60 minutes franchise, he has a book, they will not lay a hand on him but it doesnt matter. Nothing will happen because theyre more powerful than he is. Lets start a discussion on the markets themselves. Entering the final trade daegu of the First Quarter. S p trying to stay in positive territory for the period. Up a half of a percent. The dow is 1. 5 declined from q1. But its been the nasdaq, of course, thats dragged into negative territory after its worst week since october 2012, its been hurt by biotechs and momentum stocks or high multiple stocks with high growth rates. Talking of course about the netflix, teslas, facebooks of the world. Thats been the story for the last couple of weeks. And i have said a number of times, certainly last week, the damage has been far greater than you might see on the surface. Certainly to the people that i speak to, running levered portfolios, who are running hedge funds and the like, interested to see what the numbers look like when we come out of the First Quarter, given the last two weeks have been horrendous if youre long. Eight new deals coming this week. Eight deals next week. A lot of them, again, in the cloud in biotech, becausing new competition. I dont i was going through the number of companies that were 25 million companies, that are now billion Dollar Companies in biotech. One blew up this morning, didnt meet the end points on alzheimers. Theres such a plethora of stocks that people just keep selling the good ones to buy the hot ones to get the pop. When the pops stop and deals stop, youll see money flow back to these other. In the meantime, we have broken charts. Gilead the poster boy, everybody said the pill would be great. Bristolmyers, well financed, and you end up with like, ive seen numbers on gilead, this is how a stock goes down, ive seen 7 earning estimates for 2015 and 4 estimates. Right now the 4 estimate is in charge, get back to estimate the stock is cheap. With that being said, the stock down less than 9 this year, how long . It had incredible 2013. Maybe some not just quite justified. Make momentum, excitement, all about a little saying were back to earth . Its just that earth feels painful, unless youre coming down in an elon musk, able to land fire on ground rocketship. Yeah. Its like, i was hitting the golf ball great on the moon and its a little bit harder now. Yeah, yeah, i see what you mean. General motors feeling more heat as Ceo Mary Barra gets ready to testify on capitol hill this week, facing lawmakers over the faulty ignition switches which have been linked to at least 12 deaths. Gm rejected a proposed fix for the problem in 05 because it would have taken too long and been too costly. Lawmakers say federal regulators twice declined to open formal probes into complaints about the cars. Its on the cover of the new york times. Its the lead story in the business section of usa today as gm hot seat gets hotter. And the washington post, the lead is the part costs less than 10 wholesale. The fix takes less than an hour. Why did it take so long . Storys going away, zero. Look, the only way im being facetious only way to get it, recall the car theyre working on it. Recall numbers go up. The number, the sheer size 800,000. Its its its shocking. How difficult does this make you have a new ceo to begin with, i cant imagine this doesnt make it much more difficult in terms of navigating. And youve got a lot of hedge funds in there value stock, they love it pension costs you, know, they can cite a litany of reasons to continue to own it. I know you, Charitable Trust its an inexpensive stock. Why not push the sell button and buy it back when its not allowed to trade like that. Restrictions. That would have been the thing to do. Because the risk is just endless here that someones going to stop buying a gm car. The headline, what point do you feel like, you know what . I cant afford to buy a gm car. I think gm makes great cars. I think this going to pass. But when you pick up the paper every single day and its gm, at a certain point, the you know, they have to cut price on cars, the usual. Other guys take advantage of it. Meantime, mulallys pay up 11 to 23 million after one of their best years last year, in a very long time. Stocks done nothing because of europe. But if europe turns, europe inflation low and europe sales getting better, nice deflection point for ford. Its all about europe. Theyve they just didnt get ahead of it. Who didnt get ahead of it . Europe was no one saw europe coming. I dont know. Maybe some companies saw the decline to the extent, i dont know any American Companies that said, europes about to crash. You still have to be there. So you cant you have you have so soldier through, ford has and lost a lot of money. What does a Zombie Apocalypse have to do with tesla . Words from elon musk and what hes talking about. Futures, nice start to the week setting up, implied open up 85. More squawk on the street live from post 9 in a moment. Oment. With all the opinions about stocks out there, how do you know which ones to follow . The equity summary score consolidates the ratings of up to 10 independent Research Providers into a single score thats weighted based on how accurate theyve been in the past. Im Howard Spielberg of fidelity investments. The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. But with so much health care noise, i didnt always watch out for myself. With unitedhealthcare, i get personalized information and rewards for addressing my health risks. But shes still gonna give me a heart attack. Thats health in numbers. Unitedhealthcare. Tesla striking a key agreement with new york state. Automaker allowed to continue operating five existing Retail Locations in new york. Additional locations will be covered under the states dealership franchise laws. Reiterating comments made to cnbc in may, Tesla Ceo Elon musk talked on 60 minutes last night about wanting to build solar powered charging stations for his companies electric cars. Take a listen. You can drive for free forever on pure sunlight, thats the message were trying to convoy. Even if theres a Zombie Apocalypse, the grid breaks down, able to charge the car. A Zombie Apocalypse war ranty . Yeah. Story 60 minutes loves. I didnt know about the war ranty. Im raising price target numbers. See the warranties. If the shorts watch this, i mean, they have to you had to take away their ties, shoelaces, i mean, this was i want to go buy a rocket from this man, i want to adopt five of the seven children. I want to spend more time with him. I want to charge my fingers. I want to put i want to put water on my fingers and charge them because its solar. I mean, you loved him and his cars and his rockets, after you saw. More than bezos and the drones the other week with right before the big monday, right . Yeah. I mean i dont know. Musk is, i think that im in awe of the guy. Im not no sarcasm there. The guy did risk everything. But the upshot of the piece was if youre short the stock, its just not going to come in as soon as you think. Agree . I suppose. I mean i dont know that that audience and the audience that would be short the stock are in any way lets do publicity. Gm hot seat gets hotter. Rather buy a gm than from a man trying to decide whether to put to be the first man on the sun, where its very hot . Apparently its very, very hot on the sun. Ever see Richard Pryors imitation of first man on the sun . No. One of the great. They do seem to be managing that last mile distribution chain. Yes. Got the deal in ohio. Now this compromise with new york. Better than trying to fight 50 Dealer Network around the country. Yeah. If they want to buy one, Everybody Knows buy. You can go online, buy it, have enough publicity. Government says its the best. I mean, anyone who doesnt think its the best . But it was interesting, it was, a moment where they showed you the problem with the battery, that the battery is to try to get a new battery, but hes going to spend 5 billion to get a new battery. But that was thats actually a mention of something that could that is a problem with the tesla. Waiting to see which state they choose for that factory. Yes. A big decision. When we come back, cramers mad dash. Count down to the opening bell. Take one more look at futures and the premarket. Final day of q1. More squawk on the street straight ahead. I know what youre thinking. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. All right. Weve got eight minutes until the opening bell. Mad dash for monday opening day for the mets, snow on the ground. Phillies, weve written them off. Papers are so negative its scary. Two stocks written off by the marketplace and web bush is the beginning of the resurrection of lululemon right now, upgrading to from hold to buy. Why . Because you know what . Things are going to get better. Thats the thesis. But theyre saying its a draw. I think theres a lot of growth managers that want to own lululemon, Restoration Hardware did well. Lulu was a great stock to own. It probably does bounce. I dont have a thesis beyond a quick bounce. You dont . Not a long term . Numbers . Competitive. Theres a lot of competition in the space. New ceo. I liked christine day. Youve got to wait to see how the ceo does. Its too early. Heres one imintrigued of. Panera, hold to buy. A panera 2. 0, a skunk works within panera, developing a new kind of panera doing fabulously. Ron shake is totally bankable. One of my favorite ceos. I think this comes back. I think panera is a turnaround psh samestore react sellration. Line Management Issues . Weve heard about it. Youve seen the line . Its a highclass problem. People walk away. Howard schultz will tell you, its such a problem you cant make numbers. I like panera, i want to buy it. Thats what theyre working on . Exactly. Also have a better its easier, easier menu. Very good. Tokyo. Legacy of you get emotional by panera. I think those of us going to panera know a decline in quality. I think this is going to pick up. Opening bell, of course, not too long from now. Former major League Allstars at big board to kick off the baseball season. John franco, great reliever for the mets, bernie williams, great Center Fielder for the yankees. Who from the mets . John franco. Not bad. Brooklyn boy. Holy cow. So cool. L. When my son was born, i remember, you know, picking him up and holding him against me. It wasnt just about me anymore. I had to quit. [ male announcer ] along with support, Chantix Varenicline is proven to help people quit smoking. It reduces the urge to smoke. Chantix didnt have nicotine in it, and that was important to me. [ male announcer ] some people had changes in behavior, thinking or mood, hostility, agitation, depressed mood and suicidal thoughts or actions while taking or after stopping chantix. If you notice any of these, stop chantix and call your doctor right away. Tell your doctor about any history of Mental Health problems, which could get worse while taking chantix. Dont take chantix if youve had a serious allergic or skin reaction to it. If you develop these, stop chantix and see your doctor right away, as some could be life threatening. Tell your doctor if you have a history of heart or blood vessel problems, or if you develop new or worse symptoms. Get medical help right away if you have symptoms of a heart attack or stroke. Use caution when driving or operating machinery. Common side effects include nausea, trouble sleeping and unusual dreams. I had to quit smoking to keep up with this guy. [ male announcer ] ask your doctor if chantix is right for you. [ tires screech ] chewleys finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. Get the most extensive charting wherever you are with the mobile trader app from td ameritrade. Youre watching cnbc squawk on the street. Live from the Financial Capital of the world. Opening bell stoet ring in 2 1 2 minutes. Busy day. Jobs number coming up friday. Opening day for major league baseball. The final four is set. Masters is a week from now. Were in a good time of year. Yeah. This is its funny, i was thinking the same thing. Ive got obviously the 76ers are the tanksters. Hey, didnt beat the record. Right. But im looking at ice hockey. This is always the period where theres some team you like, some team youre going to root for. If you dont like anything going on now, you should leave america because this is theres some team playing right now or in the news or trying to get ahead for the draft in football. I love this period. Coming off a crazy week. Like of netflix and facebook, high momentum names, down 11 , 12 in the past five sessions. You said last week, micron would be one to watch. Yes. Micron, a lot of defense of micron today. Micron, when you look at the prices, some of the chips, they seem to be down. A lot of this is their new supply coming on. Theres new supply, microns not done going down, and thats one to watch. It does report this week. Not a lot of Companies Report this week. Waiting for chinese stimulus but didnt see any chinese stimulus. I thought of you sun night. I dont know. You mentioned that on friday. I thought chinese stimulus. Where are the deals . Its a quiet news morning, frankly, in a lot of ways, in terms of corporate news. J. Ja deal of some size. Carlisle. Looked like news but its not. Interesting, seem to be a pace, merger, acquisition activity and announcements slowed dramatically since the ukraine crisis. Well see. That wouldnt seem to be enough to derail something. Also a market thats more volatile, down. But well see if it ig it nigre. These things take time. A monday without significant activity. Ipos continue unabated. Theres some bigger this week. But i want to keep track of that. Remember, some ipos failed on friday. And on thursday. Ipos starting to fail. King was underwriter of king will tell you, ive had a chance to speak to them since, that they price that thing, way over it they could have priced it higher and the market disappeared from them the next day, in a way they perhaps not anticipated. I think theres a look at the opening bell. Pretty nice open taking shape. Good breadth at open big board, major league baseball, anheuserbusch, former mlb allstars, james franco, bernie williams, jeff nelson, celebrating beginning of the regular season. Trying to make opening day a national holiday. A concerted effort to make that happen. Well talk about that in a few minutes. Nasdaq, paylocity, celebrating its recent ipo. Cloudbased. Again, be careful. A lot of cloudbased companies coming public, thats putting pressure on others. But we just had a cessation in the window these stocks would spring back. Ones already out there have that havent come public would see more buying . Yes. If you had the seasoned players would come back, if there was a day where you didnt have to sell salesforce. Com for paylocity. Would you sell it for to get in on the deal. The deal gave you a big pop, helps performance. I know. I understand. Timehonored. Right. Youve got to take down your waiting and just to do that . Just not a lot of new money coming in. I think, after Michael Lewis comments, youll get even less coming in. Thats not going to happen. Some argue, even if that is true, that it delays any frothy period where you would get where retail came in in a big way, all right, long term its bullish. I get that. Yeah. True. We are seeing bioteches bounce. One of the disturbing qualities of the market, that you hit upon last week, all of the bioteches are bouncing. So allclear, and then by midday sellers come back and just materialize and they just chip, chip, chip, chip, chip. Maybe today be will different. Thats been the discouraging thing. Wow. David is right. From a corporate standpoint, not a lot of heavy news. One of the few tidbits out of disney. Frozen the highestgrossing animated film of all time. Unbelievable. Not adjusted for inflation. Takes the mantel from the toy story film. Thats a billion plus. Made an acquisition youtube videos, watch that, thats going to be hugely successful. Continuing to do quiet, little things. Stock has come down a lot that may be an opportunity. As hard a time we give them for the john carters of the world, give them props for that. Make up for a franchise will keep on giving. I want to see frozen 2 through 7. Six is a breakout. Geez. We will be watching them in our households, im sure for years and years. And grand children. When they do frozen 63 which i think is already in the works. To your point a franchise that perhaps could last decades. And talking about the company that owns star wars franchise, in addition to so many others, talking about ones that have lasted through 30, 40 years almost at this point. The great thing that youre going to see from disney, theyre not going to do any more john carters. They dont need to. They have so many different franchises they can do iterations for, people keep coming back. Disneys best performing dow component here, up more than 1. 5 . Makes sense. We have at t, just to reauthorization, a new authorization of a repurchase, 300 million shares, thats 6 . But this is just the reauthorization of the ongoing Share Repurchases, the companies had, its done 300 million Share Repurchase approved by the board 2010. July 2012, march 2013, its completed prepurchase, funded 2012 authorization. You have a new one. Theres a look at at t, up almost 1 . Frankly that stock has been moving up nicely lately. Yes. You had a lot of guys, long verizon, short at t, and having to cover because of the bloodshed taking place in hedgy land. Underneath, so much bubbling. And it just people at home, its like, hey, dows doing okay. S p. No, guys are being killed because stocks that are going up are stocks that theyre not in intel. Intels been left for dead. Theyre not in oracle. Oracle had a bad quarter. Thats not what theyre in. And the short short thesis in at t can they continue to maintain the dividend with the cash flow that they currently have and with the cap x demands that they have . Of course they say absolutely, but thats been an issue. And then theres the continued conversation amongst the Shareholder Base what will they do . Will they try to make a play for vodafone once they can . Will they stay here in the states and focus again, given the cfo and ceos comments recently on europe, would seem to bring them back to the states. Does that mean they try to make something happen to dish . Well see. None of it means any of its going to happen. Comcast Parent Company of our network, finally getting a little up. A move up today. Comcast up because in an interview that the cfo did with another news organization, thanks, they indicated a willingness to go another 2. 5 billion in the Share Repurchase for the year that will follow the close of the Time Warner Cable deal. Time warner had 2. 5 billion buyback in place. Time warner cable, you dont continue that once youre in the midst of getting acquired. But it would be 5. 5 billion in the year following the deal which would be significant, very significant. Thats being cheered. Of course that stock has been coming down, affecting overall value of the deal. Last week friday, solicit votes against it. Probably shouldnt have got aint lot of attention. But its interesting theyre still out there. I know thats one of the things that disney does when they announced the big acquisitions, they up their shares. Right. At the time, comcast said well buy back 10 billion, well add 10 billion, thats over time, not immediately. This is an allstock deal that comcast is doing. Many believe, given the lack of leverage on the balance sheet, if not all cash, certainly a lot of crash, would have been offsetting that or using cash in part to buy back share is what they chose to do. Nice column by jim stewart over the weekend about roberts and his transformation of the company, xfinity. There was a moment roberts said if we just stayed a Cable Company wed be dead. But that was talk about what certain acquisitions you see people doing in some of these companies, well, that was a very telling comment, they could not just be a Cable Company. He has a longterm vision that hes able to pursue in part, because again, familycontrolled companies. Thats always helpful. A big issue. And you believe me, Time Warner Cable, theyre thinking about the next deal. How many years down the road that may be, i know it. Being viewed as a Technology Company and competing with likes of dole and apple and those kind of companies. David carr interesting, cnbc didnt even comment. About murdoch. Im outraged. Lets go do bob. Where was the outrage . I forgot to be outraged. Next time i intend to be outraged. Not that david carr would have seen anyway. Oh, man dows up 119. Lets get to bob pisani on the floor. Guys, nice start here, last trading day of the quarter here. All ten sectors looked like they were up, and yet for the quarter, its been pretty tough for stock overall. Bonds are winning. First quarter stocks versus bonds. I look at this simply. Vand guard total bond market versus vanguard total stock market. Bond markets winning. The big market leaders we had in earlier part have become lug ards now. Consumer discretionary in health care, technology in march, they were the leaders. But in the month of march, that group has become a laggard now. Put up consumer discretionaries down 3. 5. Health care down 2. 6 . Technology down 0. 6 . The question here is whether than going to continue going into the quarter. Selloff in the big growth, big momentum names. The pan door rao pandoras, netf see growth in second and Third Quarter thats going to make a difference. People start selling growth names they paid a lot of money for, those names, pandoras and buy more value oriented names and maybe, folks, thats why were seeing a big move up in march in the consumer names. So put up kroger, pepsi, campbells, a full screen, weve had a great run in consumer oriented names in last three, four weeks, kroger, pepsi, campbells. Maybe the economys picking up, pay up for the value names. Lets me talk about Michael Lewis for a minute. Well discuss this at 10 15 eastern time. Bottom line here is on this whole thing if youre longterm buy somewhere trying to buy stock, there may be a High Frequency trader trying to scalp a. Ny from you. I dont like that idea. Are they liquidity providers . Well if theyre on the bid and offer, they are, even if its a vanishing liquidity, all liquidity is vanishing, even guys here, all of the market makes not High Frequency traders, liquidity is fleeting. Lets work on principles that govern trading. Two i always talk about, one is information should be available to participants at the same time. I think everybody should work unthat principle. Second principle, regulators need tools to investigate whether theres abuses out there. The government doesnt have them. Theyve got a system for the first time where they can look at market abuses, but its not adequate. There is a consolidated sorry about that. We are definitely talking about Michael Lewis down here, big time. All right. Whats going on with the treasury marks . Yields moving higher. Moving higher aggressively . Not quite. But almost. Twoday chart of 5s. Thats where the act is today. Open the chart up, highest yields, going back to september. If we look at other end of the curve, the tenyear, twoday, you can see its staircasing, 30 staircasing. Here is where it gets strange. Year to date chart of 30s. Last week flirting with 350, which was hovering at the lowest yield levels since last summer. So the curve is where the actions at. Open it up, see the 5s, 30s together you, can see what i mean. Hovering at the flattest since 09. Hard for traders to jump on board selling especially the long end. When it seems to be fighting, based on the flattening. Switch gears. Lets look at whats going on with the dollar yen. One day chart, you can see this is popping up. But the best chart is this yeartodate of dollar yen versus tenyear note yields. The flattening of the curve, associated with lower yields, may be ready to crack and go the other way. Along with yield curve and Michael Lewis, well be gabbing down here all day. Back to you. Rick santelli at cme. Baseball season is here. Joining us this morning, bernie williams, former Center Fielder, jack morris, former starting pitcher, john franco and jeff nelson here to lobby, basically, for making opening day a national holiday. Gentlemen, good morning. Good to see you. Good morning. Serious about this, john . Yes, we are. Trying to get a national holiday. Everybody plays hooky from work anyway. Might as well have a nice day at ballpark. Theres a petition, right. There was. I think you have the number of signatures, 100,000. Thats in washington right now. Jack, people have said, day after the super bowl need to be a holiday. Why is this more important . More games in baseball. This opening. Its just its festive day, really. Its a great day for baseball, opening days always special. Why not make it a holiday . Bernie, you know, i can imagine this having happened a number of years ago perhaps, but these days, football seems to be the national pastime, i hate to say it and oom a big baseball fan, i grew up in queens, im a mets fan. But arent you competing against a stronger sport out there . I dont know. I think that, you know, for more reasons than the sport, i think, you know, the beginning of the spring and that signifies great things of the beginning of the year. Why not baseball . You know, its just a lot of great things happening at the beginning of the year, spring, warm weather coming in. Well, some years. Well, yeah, some years. Snow on the field. For the most part. Im up for it. Jeff, talk about the money this season. Looking at large contracts for cabrera, ellsbury, have we crossed some line somewhere . After this were going to start working out, were coming back. Coming back. Comeback begins. This is what it takes to sign big guys and free agent look at yankees with ellsbury, beltran, mccann, tanaka, they had to spend money to get back to where they were and the world series. This is what it takes and thats the moneys there for it, big tv contracts. So thats what is there, thats what it takes to sign big guys now. The mets didnt spend that much, did they . Youre still involved with the organization. A lot of young pitching in the organization. They are relying on that. Im sure next year or so, theyll spend money. If things get close this year, im sure Sandy Ellison will make a trade. Keep omar. Finally, jack, what its like playing in weather like this . Does it affect performance or not . Its a drastic change coming from florida or arizona to come into the northwest, northeast, upper midwest, playing in a cold climate. But everybody gets excited about this kind of day. If you dont you have to tolerate. You have to tolerate mother nature. She rules over all of us. You adjust, doing the best you can. Would the markets be closed if you get your way . Yes. Sure. All right. Guys, thanks so much for coming by. Heres to a great season. Thank you. Rick, over to you. All right. Hey, we have chicago. Its a march read. D disappointment. Looking for 59. 5. 55. 9. A whisker under 56. Last look, story solid 59. 8. The weakest headline read since august of last year. Of course, ill continue to comb through the internals. Suffice it to say, tenyear note yields hovering at a critical level, 2 3 4 and it isnt the first time. Back to you. Thanks very much, Rick Santelli. Next, stop trading with jim. Squawk on the street is right back after this. Back after this. Cut [bell rings] this. Is jane. Her long day on set starts with shoulder pain. And a choice take 6 tylenol in a day which is 2 aleve for. All day relief. Hmm. [bell ring] roll sound action peace of mind is important when so we provide it services you bucan rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your information safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. [ female announcer ] the sun powers life. And now it powers our latest innovation. Introducing the worlds only solarpowered home energy system, which can cut your heating and cooling bills in half. Call now to get up to 1,700 dollars back or special financing on select lennox home comfort systems. Offer ends june 13th. Plus download our free lennox mobile app with an energysavings calculator. If your Current System is 10 years or older, start planning now and take advantage of special financing. So call now to get up to 1,700 dollars back or special financing on select lennox home comfort systems. Offer ends june 13th. And download our free lennox mobile app. Lennox. Innovation never felt so good. Dows hanging on to gains after the pmi number. Mid america truck show last week, i think cummings is terrific. One that is lagging, is paccar. Class a truck apz bull market. Allison transmission doing well. Alcoa confirmed this to me last week, this is one of the moments where you can buy stocks in this group and have a multimonth run, because trucks have been depressed. Rebuilding at postgreat recession. Paccar is the only one that hasnt moved and id take the stock to 70 right here, right now. A couple of calls an this last week. I think this is this is look at cummings, its behind. I like cummings cmi very much but i like paccar very much and this is going places. How would you rank it in terms of favorites versus this and the rails . The rails have had a big run. You need coal to continue. Union pacific kind of stuck here. I think csx is the cheapest. I would take csx up through 30. The truck bull market has been, lets say, this is what happens when you begin to get nonresidential construction going. Obviously the stuff that you carry trucks is pure commerce because bigger stuff goes by train, thats why its a great thing to ask. But i think the truck business is just ready to roll in this country. Cummings, by the way, big chinese, thats also going to help. And i think that paccar is the one. I dont understand why its not in 70 right now, it should be. Tonight on mad . Looking at i think an app for investor relations. Why is this important . A lot of people want to know about companies on their handheld, and it hasnt been that accessible. Well talk about that. Ill reveal a name is that overguided people weep calling me on and ill cover High Frequency trading in a way that agrees with Michael Lewis. You do . Come back to it despite the fact youve done it 100 times. I want to cover what people are nervous about. Sure. I think people can say, listen, sure, it may be rigged, but please, its rigged short term. Take a longerterm view, youre not going to get hurt by it. It may hurt the hedge funds who trade in and out i was going to say, theres a school of thought this is cheating the richest of the richest of the rich in this country. Exactly. Go to Steve Liesman right now. Yeah. Lets go to Steve Liesman who has got news on janet yellen. Janet yellen speaking now in chicago. Feds extraordinary commitment is still needed and will be for some time. She says the views on the need for fed commitment are widely shared on the fomc. The labor market slack shows a need for the fed to help. She gives five reasons why she thinks there is labor market slack that needs the feds help. One is that a few people quit their job voluntarily. Many working part time for economic reasons. Wage gains small. Many unemployed for six month or more. No doubt that the economy or the job market are back to normal health. Recovery feels like a recession. She mentioned three individual workers in a very almost populous style here, guys, showing a pretty important break with how bernanke would have given a talk like this. Inflation is below the feds 2 target. The fed takes its inflation target seriously, a sign that it will be as concerned about inflation on the downside as on the upside. And tapering, she said, should not be seen as a lessening of the feds commitment. Gentlemen, if theres any doubt where janet yellen stood on the issue of labor slack and the feds role, that should be dispelled by the speech, which is strong in terms of the fed e needing to respond to problems in the labor market. She doesnt agres six months or longer, which i the statement she made in the press conference but does suggest that she would be on board with keeping the extraordinary measure of the Federal Reserve in place for a long time. Carl . Steve, thank you. Steve liesman, bringing us up to speed on what yellen is saying in chicago as we speak april lot of talk whether or not the six months was a rookie mistake or Something Else seems like it. Also, a couple of good articles that ive been flummoxed how strong bonds are and Interest Rates going down. I know that theres rick will be saying, theres a lot of bond buy big the government. But, frankly, it did signal the economy had a big pause and i dont think thats the case. Maybe friday well get the answer when we get the employment number, the single, most important thing that is happening particularly in the absence of news. No doubt the sixmonth comment was an Inflection Point for high multiple stocks and detailing the falls. Thats whats been going on. Thats why were talking biotech, that why were talk about netflixex and facebooks. Were seeing a bounce in tech names. Can it last . Whether amazon or facebook or google. Gilead is up. Gilead is even up. Celg is up as well. Also a new classic cholesterol drug, statins, may low bad cholesterol, having some impact on the group overall, some of the names. Right. A lot of that is generic component, guys against it. You need to see celgene back to 145. If its going to earn 7 bucks its not selling at ten times earnings. Tesla i speak the truth. I guess it was did you independent confirm that. I had to look, i thought tesla down . Its our last show of the quarter. As david said, weve been through highs and lows, yellen six months and for the quarter, s ps up. 5. Nasdaqs down. 5. Is that how the rest of the years going to go . If this is the churning that were going to have, we need to see some m a. We need to see the end of the supply coming in. Then we can get back on track. I actually believe the earnings are going to be better. I think well be sitting here in two weeks discussing raising number. Raising numbers companies, like i did with the trucking companies. Underneath a lot of bubbling of good things in the industrial world. So im not im im sanguine. Sanguine. Sanguine. Im sanguine, as i open my letter to see what school i got into. That time of year. A lot of disappointment. Yes. Wont be long before those earnings are coming out in earnest. I think theyll be fine. See you tonight. Thank you. Mad money 6 00 p. M. Dows up 147. S p at 1872, just a stones throw away from alltime closing high. And well get more on Janet Yellens remarks when we come back. And this will be your premium right here. Sorry to interrupt, i just want to say, i combined home and auto with state farm, saved 760 bucks. Love this guy. Okay, does it bother anybody else that the mime is talking . Frrreeeeaky [ male announcer ] bundle home and auto and you could save 760 bucks. Alright, mama, lets get going. [ yawns ] naptime is calling my name. [ male announcer ] get to a better state. State farm. Breaking news. Janet yellen has begun speaking eight conference in chicago. Straight to Steve Liesman who has been monitoring at hq. Making a statement a comment about the job market and talking about now much slack there is in the job market. A critical issue for the Federal Reserve, as yellen says, because it has to do with how long theyre out there keeping policy low, keeping rates low, continuing with quantitative easing. If theres a lot of slack in the job market, then the fed can remain low for a long time. If theres not as much as they thought, you could have an inflationary pressure. Some of the things shes saying, the feds extraordinary commitment is still needed and will be for some time and those views are widely shared on the federal market committee. Theres no doubt the economy and the job market are not back to normal health and labor market slack shows still room for the fed to help. Thats what janet yellen is saying at this time. Also as i said earlier, almost making like a political speech out there. Heres the reasons why she says theres job slack. 7 million working parttime for economic reasons, few people quit jobs voluntarily, all sign of a job market that she says feels like a recession to many americans. Carl, she mentions three workers individually, talk about their particular plight, and its part of a promise, not to forget the people behind the statistics. Very different style from former fed chairman ben bernanke, carl. Referring to people as if like the president in the state of the union . Very much so. Three individuals and their plight in the job market, one unemployed for a long time and talks about the difficulty that people who have been unemployed for six months or more have getting back to the job market. It like a black mark on their resume. Interesting, new style from the fed chairman. I wonder if well get clarity on the market moving comment from the last fed meeting, sixmonth comment, especially there was confusion of what her intention was. This is not that clarity, sarah, that you might be looking for, but in a sense it is, in the sense she comes forward and says if you had any doubt you thought i might be raising rates quickly i want to tell you what i think about the job market and how much slack there is out there and what the feds role is. She says theres lot of slack, and theres a massive fed role in soaking up that slack. Also makes a single comment about inflation where she says, let me get the exact language, inflation is still below the feds 2 target and the fed, quote, takes its inflation goal seriously. What that means, inflation is too low. And so when it says it takes its goal seriously, 2 is a symmetric symmetrical concern. Now that its below 2 , i take that seriously. If you had any doubt, sarah, where janet yellen stood on the issue of labor slack, you should no longer have that doubt. Steve liesman at hq. Stocks are rallying. Up 150 on the dow. S ps up almost 16 points. Lets bring in the executive Vice President with bmo private. And harry clark, chairman, founder and ceo of Clark Capital management. Good morning. Good morning. Jack, sounds like shes trying to make up for that sixmonth comment. Is that how you read it . It is. Keep in mind, they are taking inflation seriously. One thing to note, during this last round of qe, the trillion dollars a year of stimulus or bond buying, i should say, Inflation Expectations have fallen since that initial announcement through the program. So, i think thats for them its a failed program. They want to move that to the sidelines and look at other means to try to goose Inflation Expectations at the very least. Harry, what does it said about our expectations for friday, with consensus at 195 . I think consensus is pretty good. The job markets looking better. I think Janet Yellens great. But ill remind you that shes now the 14th chairperson to take over the fed in its history and never has one been successful avoiding a correction. Every fed chairperson holds a correction for six months for average. Things look very good, the markets doing everything it can to be right the shortterm move coming here and then weve got to see. Midyear elections years tend it to be very week second and Third Quarter. Average declines 21 . Things look good today, wait and see what happens midyear this year. Speaking of catalysts, jack, your thoughts on the jobs number. How badly do we need a good job number for march, especially to prove the last few months of weakness, the setbacks in the economy, were due to temporary factors like the weather . Yeah. Sarah, its enormous. I think we need to get back on that 200,000 track or better. The last three jobs reports have been at or significantly below the previous 12month average. We need to get back above that 200,000 number to really demonstrate that as the weather warms up, economy will heat up. If not, the fed really, you know, unless theyve got other crazy tool in their tool kit theyre not telling us about really just have to sit on the sidelines and watch. Speaking of sitting on the sidelines, guys, i wonder whats being said in your circles about the Michael Lewis interview on 60 minutes. We tossed it around here this morning, naturally its a talker. But, harry, i mean, can you see any longlasting effects on retail psychology because of this dynamic, whether you knew about it beforehand or not . Carl, i think its interesting to hear about that. Weve always known about the trading there. I think the public doesnt care if someone makes an extra penny in a trade. Professionals do, big traders do. No effect on public psychology whatsoever, carl. Jack, what about you . You think longterm investor, as jim said, maybe not the biggest deal and you you should be in the stock market for the rest of the year . I think investors should be in the stock market. And you know, just another, you know, clip away at underpinnings and confidence in the system. You know, given High Frequency trading accounts for 80 of volume these days, it is an enormous factor. And while they say that theyre adding liquidity if they are electronically front running, what theyre doing is always moving the same direction as the market. Liquidity is generally absorbing market action, not selling into a selling market or buying into a buying market. That really isnt liquidity, its volume. We need to take a closer look. It does cost investors retail and institutional and certainly the confidence in investing in the market. That may be true. Guys, we havent talked to many people who believe it needs to be addressed or not, that it will be addressed by exchanges or regulators or both. I believe it will be addressed at some point about the effect, as jack said, 80 of volume that is kind of trading, not much you can do about it. A lot of that happening. I think the public will forget about this in a few days, not a big effect on public psychology. The public still way out in the market, carl. Wont knock on the market until later this year until a correction. A correction this year may give Public Confidence to start buying. They have not done it yet. A lot to talk about today. Thanks so much, jack, harry. See you soon. Thank you. Have a good day. Up 144. Over to dominic chu. Amge in, new class of cholesterol drugs to lower bad cholesterol by 66 . Study presented over the weekend in washington, d. C. Those shares up, again, 3 on this news, it could be beginning of a new class of cholesterol drugs. Back over to you. So, stock market is rigged, says Michael Lewis, in his new book flash boys. High frequency trading back in. Is criticism fair . Well talk more when squawk on the street comes back. Reet co. Weekdays are for rising to the challenge. Theyre the days to take care of business. When possibilities become reality. With centurylink as your trusted partner, our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. Every day of the week. Centurylink® your link to whats next. announcer scottrade knows our and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. The stock market is rigged, thats the thesis of the new book by Michael Lewis called flash boys. Lewis got the 60 minutes treatment last night. Listen to how strongly hes stating this argument the stock markets rigged. The United States stock market, the most iconic market in global capitalism is rigged. By whom . By a combination of the stock exchanges, the big wall street banks, and High Frequency traders. Here we are on the floor of the New York Stock Exchange. Ben, albert, and bob. Obviously, these comments resonated. Weve been talking about it for a while. Years and years. A big megaphone to get attention for it. Look, weve got concerns about High Frequency trading. Id like to see changes. But rigged . Overstatement. For sure an overstatement. Definitely High Frequency traders that would like to charge you a penny for your liquidity and the right to buy stock. It was a powerful image to show how fast they can get it and how fast the price can disappear. The fastest one into the crowd the successful trade. Years ago on the floor of the New York Stock Exchange you used to pay to have location of the booth to have direct sight into the ibm crowd or philip morris. What hes describing and calling rigged, he honed his skills as a hawker on bourbon street in new orleans where hes from, to get your attention to sell a book. Thats just a pure play on what im concerned about is the psychological impact. We want more Public Confidence in the markets. Im not happy if a High Frequency trader wants to scalp a penny at apple, youre paying 535. 01. Im not happy about that, but it isnt a disaster. Youre buying 100 shares at 535. 01, youre paying a dollar more. How do regulators get at it . Theyve been looking at it for a while. Nothing has been done. Again the question, what if anything should be done . We should work under general principles. First one, information should be available to everybody at the same time. Transparency. Some instances where that hasnt happened. Im glad to see some corrections are being made. The government ought to figure out whether people engaging in abusive and manipulative practices dhoerng hathey dont technology now. It would give them the information to try to figure out. Claiming theres front running going on. And there is in a sense. But the front running hes talking about is not 50 of the daily trading volume. High frequency trading involves a great deal. Theyre capturing rebates because theyre paid for order flow of the exchangeans front running hes talking about is somebody in the market who is reading somebody elses order and the only movement for that, the reason to buy the stock, because there is no another buyer, there need to be ruled against, so to speak. But thats a small percentage, if you will, in terms of 50 . Its still front running. Its legal. The things he was describing, using fiberoptic lines, to get faster to exchanges, perfectly legal. But not trading but not trading on information on an order existing in the market. Before the exchanges became electronic and owned by membership, and owned by shareholders, that was frowned upon. We stopped it. Weve got to go. Obviously, its a hot topic of discussion. Virtue ipo perspective, another topic. Trader talk. Check out my trader talk. Check this out. Michael lewis on power lunch tomorrow. You will not want to miss that interview. We have breaking news on bill ackman. Lets get to scott wapner at hq. Bill ackmans boosting his stakes in both fannie and freddie. And the comment stock, ive learned, ive had a conversation with him, you know that theres this johnson and crapo plan on capitol hill that would wind down fannie and freddie. The likelihood of that happening is decreasing, at least in his hind. Thats why hes increased stakes in fannie and freddie from a cop bijed 9. 8 to more than 11 of each of these businesses, which is quite interesting, just given whats going on down on capitol hill. That conversation has heated up in weeks about future of both fannie and freddie. Again, senators johnson and crapo want to wind down the entities. Bill ackman had been in the names, as well as other hedge fund managers. Increasing his bet that the likelihood of that happening has decreased, just a bit. Well keel an eye on fannie and freddie today. Whats interesting about this decision by ackman is, its the comment. Bruce ber cowits, they have taken significant positions in preferred, also litigating. But hes chosen a risky approach it would seem, with the decision to invest significantly in the common stock as oppose odd to those preferred as berkowits as they cot b combat the government on the u. S. Treasury. Those in the preferred, david, obviously, litigating and trying to make their bet on the fact that if they were wound down or however the future of fannie and freddie were sorted out, that they would be compensated in some respects first. Its the common shareholders who are potentially stand to lose everything if those entities were wound down. Look, i dont very to tell you, hes a gun slinger. Hes making a bet here that the likelihood is decreasing. There are those on capitol hill who would say that theres not a lot of support to get this done. That being the johnson and crapo plan. Maybe ackman is betting on that side, maybe hes had conversations on capitol hill. Crapo is retiring. Well see how much how long legs it has when he does leave. Thats another story go people rolled their eyes when ackman invested in general growth, a bankrupt company, incredible win for him. David, these investments, as they have been for many big investors, have been incredible investments up to this point. Its the unknown down the road that leaves innuendo to the vast amounts of money the comment could be worthless, a key point to be aware of. Thanks, scott. Scott wapner. A major name in casinos and resorts severely undervalued says the next guest. Saying theres major room to run. Well see. Squawk on the streets back in a minute. A minute. Whats in your ear . Oooo a quarter check for more well, i guess i can double check. My watch [ male announcer ] it pays to double check, with state farm. And a life of purpose and meaning was infused into a corporate culture. There was a commitment to creating new jobs out of recycled metals, right here in america. And a bank that helped carolyn rafaelians business grow from a rhode island storefront into a global sensation. Thats the beauty of connecting a vision to an enterprise. Thats bank of america. Work with equity experts. Who work with regional experts. Thats when expertise happens. Mfs. Because there is no expertise without collaboration. Next guests hedge fund has been betting big on Las Vegas Sands and in a new note, theres 50 potential upside. Jonathan litt, nice to have you here. Thank you for having me. A longtime analyst, for many, many years in the area. Youve taken on activism as well. Id love to start, the whole idea, you manage money now, why put out notes anymore, why advertise in a sense your long position . Some people have a problem with that. Sure. The discipline of writing is enormous. You cant make stuff up. Youve got to get it right. But really the way to focus on writing is friendly activism. The way with Las Vegas Sands or cali ways to get the message across that we think theres another way to look at a stock and where theres a lot of value to be realized. No activism here. Which one . Lbs. Lbs, its friendly, right . Sheldon adelson isnt going to do anything he doesnt want to do. But to the extent to highlight a way for a lot of value to be unlocked and encourage them to look at it its a value that we can bring to the table. So what is the way that youre encouraging them to looking at highlighting value. 18 months ago we got into th bucks a share. We look at this as real estate. We thought it was worth 85 bucks, malls, lodging, two areas weve done forever, and the casino floors. You break each piece out, 85 a share, and the thought process was, if the operations dont come back, how do you underlock it . Spin out the malls and spin out the lodging. Easy to say those things. I can remember investors in sears, for example, saying similar things about potential inherent value in the real estate, none of which has been realized. Why would that be the case here . I think theres so much value and sheldon is economically driven that if he saw this as a way to get to 85 bucks, he would seriously consider it. Most recently, weve heard from management that theyre contemplating a spinout of the retail business, which is 12 billion business, the most productive mall portfolio in the world, bar none. And anyone who invests in real estate has to own the stock and overweight it if they do. Your take on what happened last week, and youve got a couple of nice days here bouncing, but what happens next . I think theres a big rotation going on out of growth names and into value name. Were not in this name as growth investor or value investor. We see a tremendous amount of real estate value and the growth is enormous. Theyre going to grow ebida 80 this year. Theres no new supply. To invest in china, where theres no supply competing with you, its incredible. One of the most incredible stories ive seen in my career. A question on reits. Youve been a longtime investor in them. Worried about the prospect of higher Interest Rates hurting that sector . Rates have gone up and down many times over past 25 years ive been in it. Typically a rising rate environment is favorable to investing in reit until the end of the tightening cycle. Think 98, 06. Well be fine. Pick your spots. Some stocks youll get hit, some stocks youll do well. Activist front, commonwealth, not a name youre involved in, but certainly a battle that has been won by activists, consent solicitation. Real value in cwh . I think sam zells taking it over. I think that from where the stock started to where it is today, a tremendous amount of value has been unlocked. And a fantastic job. Under zells leadership he sees something in suburban office where he can capitalize on it and really drive value. Not dissimilar to what we see today in a name we ran today, theres a lot of value that could be unlocked. Ysucceeded in bre. Coming up, partying like its 1999. Jon steinberg, president of buzzfeed and the other b word, website troubles for obamacare. Deadline is today. Well discuss on squawk on the street. Street. My name is jenny, and i quit smoking with chantix. Before chantix, i tried to quit probably about five times. It was different than the other times i tried to quit. [ male announcer ] along with support, Chantix Varenicline is proven to help people quit smoking. Its a nonnicotine pill. Chantix reduced my urge to smoke. That helped me quit smoking. [ male announcer ] some people had changes in behavior, thinking, or mood, hostility, agitation, depressed mood, and suicidal thoughts or actions while taking or after stopping chantix. If you notice any of these, stop chantix, and call your doctor right away. Tell your doctor about any history of mentalhealth problems, which could get worse while taking chantix. Dont take chantix if youve had a serious allergic or skin reaction to it. If you develop these, stop chantix and see your doctor right away, as some can be lifethreatening. Tell your doctor if you have a history of heart or bloodvessel problems or if you develop new or worse symptoms. Get medical help right away if you have symptoms of a heart attack or stroke. Use caution when driving or operating machinery. Common side effects include nausea, trouble sleeping, and unusual dreams. My quit date was my sons birthday, and that was my gift for him and me. [ male announcer ] ask your doctor if chantix is right for you. Dom chu. 14 points upside for the s p. Good day for the momentum stocks check out priceline, amazon, netflix, facebook, names weve been hitting on going lower, yes, they are having a break from the action. Up a percent or so for all of the names, again to the upside. Momentum names, at least today, to the upside for right now. Thanks so much. On the momentum names a slew of Tech Companies with big valuations, buyouts at sky high multiples, is tech partying like 1999 . Jon joins us at post 9. Good morning. Good morning. Big piece in the times, looking at king specifically. Yep. I wouldnt argue with rigorous analysis but its getting attention. Theres an ipo with characters Walking Around dressed in fruit suits for a company that had highly concentrated revenue. New york sometimes puts the strawberry on the cover, partying like 1999. King does 2. 6 billion in revenue, 30 Profit Margins. Its a bit of a stretch and aschtick, i think. What degree is this true, this echo of the dotcom. If you look at stocks on a oneyear basis, theyre massively up. Indexes, massively up. Theres a modest correction on expensive stocks but Real Companies with real revenues. Hard to argue its a bubble. One of the examples, which resonated, air b b, valuation of 10 billion, for man the entire Hyatt Hotel Chain with no hotel. Love the venture round. Preferences on the investment. The investors get money out. Its not a real 10 billion. Investors get money out if the liquidity event, its liquidation preference. Its not real 10 billion. Notable about kirng modestly it was priced. It did terribly in the aftermarket and underwriters told me, we could have gone higher, we didnt expect it to evaporate the next day. This company does a lot of ebida, it may not perhaps it is a withinproduct company but it may not be. Its like facebook. Facebook was in 20s, everybody said a Terrible Company they dont make hmoney. Crush is the same thing. If you took out candy crush, other five games do 125 million in bookings per quarter. Candy crush is the problem, its a massive outlier. A whole entire mean that candy crush is a Terrible Company. Industry growth will not support the number of players trying to get in or already in, right. Thats a danger. Cloud there will be washout. Yes. The other issue with these things, theres a lot of cloning. We talked about Cloud Storage last week, theres a commodity theres any new game today, 2048, block game, cloned 50 times, take players away from candy crush. Youre right, so many cloud users and game players. To move along for the broader market, one of the distinctions that was made, and this is what weve been seeing, the dow, the major components of the s p 500, the big companies, not getting dragged into this valuation craziness. And thats different than 2000 where you saw price to earnings multiples in the 50s and 60s. Yes. I will say theres an Interest Rate issue going on. The Interest Rate comments from a couple of weeks back by yellen affected this and everybodys afraid if youre able to earn any return on your money, investors will not be desperate for any growth in the tech stocks and that may take down multiples. Names are up because the broader markets up. People feel like shes not going to take up rates soon so i need to be the names. Some invest in the Public Companies that allot of the growth is taking place during the venture phase and one those become public, theyre becoming public later in their lives youre dealing with declining growth rates as opposed to accelerating. Thats right. When you talk to bankers and Hedge Fund Investors so many want private funds to get into because they can lock in being in a company at 1 billion before price at 1. 2, 1. 3 billion. Spreads are narrow. Dangerous for the Venture Investors because of Market Conditions change a bit, theyre effectively in a public stock and they might be subject to a lockup of 180 days because theyre in a private round. Speaking of public stocks and market structure, what are your friends saying about Michael Lewis today . I havent talked to any of my friends. I watched it with my wife, i thought, is this news . Everybody has known that fiberoptics in proximity to exchanges have always been an influence of being able to trade. Im surprised at such a big story. I want to read the book but i feel like it will be boring because its one topic that i already know. Is it enough for someone like Michael Lewis to weigh in to effect change . We can talk about it here until were blue in the face. Its a question how media influences. The fact of the strawberry on the cover, Michael Lewis saying its rigged, its not rigged, its if you paid, unfair advantages in trading. The effect of Meredith Whitney on 60 minutes with the muni bond market, led to youb flows in market when the pros were saying this is incorrect. Look at amazon and drones, everybody knew that everybody United States excited about droe drones. 60 minutes, i tell you, for a show that gets to a very older demographic, its moving everything these days. Its still the news show, so to speak, for the nation in many ways and has great influence. Mark cubans on the half, talking about market structure. Would that weigh on your decision to take buzzfeed public. I dont know who was talking about the fact that its a penny here, there. Unless youre a High Frequency trader, being front run in High Frequency trading doesnt impact you. And if anything, the jobs act has been transformative. High Quality Companies, low Quality Companies but the governments done a good job of allowing subbillion Dollar Revenue Company to do the work without being in the public life. Jon, see you soon. Coming up, how china fooled the world. Next guests premise. Rick santelli in chicago with that next. Squawk on the street. Aw on the aflac. Aflac, aflac, aflac [ both sigh ] ugh you told me he was good, dude. Yeah he stinks at golf. But he was great at getting my claim paid fast. How fast . Mine got paid in 4 days. Wow. Thats awesome. Is that legal . Big fat no. [ male announcer ] find out how fast aflac can pay you at aflac. Com. With all the opinions about stocks out there, how do you know which ones to follow . The equity summary score consolidates the ratings of up to 10 independent Research Providers into a single score thats weighted based on how accurate theyve been in the past. Im Howard Spielberg of fidelity investments. The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Welcome back to squawk on the street. Check out the biotech company, surging on the news the he mow feela drug approved the stock up 3 on fda approval for hemophilia type fee. Back over to you. Specific catalyst there on that drugmaker. But biotech has certainly been one that everybodys watching right now. The momentum trade has run up sharply and in the last few weeks come down. Theres the nasdaq. Thats where wieve seen the buk in the quarter. Were seeing outsides move, some wondering if theres a rotation going on from the high flyers, nasdaq, biotech, into some of the more quality names. Thats just one of the discussions here on the floor today. Coming up, two bankers quitting their job to start a retail business. Unearthing a hidden market. Free shipping, new retail, next on squawk on the street. E str Beautiful Day in baltimore where most people probably know that geico could save them money on car insurance, right . You see the thing is geico, well, could help them save on boat insurance too. Hey okay. Im ready to come in now. Hello . Im trying my best. Seriously, im. Im serious. Request to come ashore. Geico. Saving people money on more than just car insurance. [ 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. The deadline has arrived, kind of, to sign up for health care under the Affordable Care act. Must start before tonight. Bertha coombs back at hq. Everyones watching the website. They are watching the website. People start the process today in the three dozen states on the healthcare. Gov site, they will have until next week to finish up and choose a plan. They had an excuse, forgetting that extension, because the plan went down for regular maintenance and then took a while to come up. It was down for about four hours until 8 00 a. M. Eastern time. But overall, the site has been working well, Health Department Officials Say theyve seen record numbers of people coming to the federal site with more than 2 million visitors over the weekend. By last week the president announced the administration had reached the milestone of 6 Million People total, having signed up for coverage. Thats the revised target number from the cbo following the botched debut. The white house made a fullcourt press with the president front center on shows like funny or die, the ellen show, make a push for young people under 35. The outreach, so pervasive, fodder for saturday night live this weekend. Speed is going to eat this up. Hey, i dont know, mike. This seems to be three, two, one. Its with the federal site working well, analysts think that push really is whats making the difference. I think that that reached a very important target group weve been focused on, young invincibles, younger, healthy adults, tend to be procrastinators, watching late night tv, on social media, certainly a big part of the push over last several week has been aimed aat them. Everybody wants to get them into the pool. Insurers getting a healthy release of the end release critical on the exchanges. Shares that have the most exposure are mostly higher. The next big challenge, of course, making sure that these enrollees pay up and in some states like california, they have a couple of weeks to complete their applications and get their payments in. But, converting them to people who pay up is the next big challenge. Yep, going to be a question mark. Bertha coombs, thanks very much. Todays squawk breakthrough. It has created what is arguably the first online destination for Fashion Jewelry. And in the process, made it possible for customers to purchase accessories. Theyve just seen on the runway or in the magazine at guilt free price points. Bobble bar, partnership with nordstrom. Cofounders of bobble bar. Here they are at post 9. Welcome. Thanks for having us. Congrats on this relationship that you have with nordstrom. Tell us how you found within in a crowded retail space this niche nobody was conquering. We were avid consumers of the product and felt a lot of people were innovating on different ways to mark the product and reach the consumer but people werent innovating on how to source the product in realtime based in data on the marketplace. A big part, collect data and analytics on the customer what theyre searching for, buying and converting on, and leveraging the supply chain to deliver what they want in realtime. Take the data and go directly to manufacturers . We design inhouse and work with factories, all over the world. A full inhouse design and fashion team that designs the product based on information that were seeing in the marketplace. How leveraged are you to, say, what silver has done in the past few weeks . You know, we sell Fashion Jewelry, so its materials, not gemstones, not diamond, not platinum. Were a little bit protected against those trends. Right. You raised 6 million. Yes, to from excel partners. Planning on raising more. Whats the next step businesswise . Well raise more capital. We worked hard to build a capital efficient business. Having strong partnerships with nor nordstroms helps us. Something about nordstrom that attracted you to them . We think highly about the brand. Theyre at the top. When theyre always putting Customer First and always thinking about innovative experiences that will engage to their customers, they saw a great opportunity in the Fashion Jewelry space, and we met their team last summer and its a immediate click. Excited to come up with concepts for the jewelry customer and rays the bauble bar brand. Youre a website, primary driver of revenue but youre not a believe that brick and mortar is dead and youre very much in that as well. I think theres a difference between third Party Retailers that sell other brands and website thats building their own brand. For us we think of it as were building our own brand from scratch. In order to do that successfully, you have to have multiple touch points for customers. How important is it for the customer to touch and feel . I would any fairly important when it comes to jewelry, regardless whether costume or high end. Its important for all products, right . Thats why you see trends for show rooming and people wanting to touch and feel offline. For us its having multiple touch points. Whether us offering Free Shipping and return or putting our product in 35 nordstrom jewelers overnight, were coming to a store near you, come by, pick up the product, buy some while there. People said tiffany needs to be less of boyfriend occasion Shopping Experience and more of everyday pop in get yourself something nice right. What percentage of your customers are guys versus girls . Men versus women . We see guys shop our site so much. They see their girlfriends, sisters, moms, get bauble bar packages to their door and they interact with our site to pick up perfect product. Thats whats great about offline, its a high touch experience for them. We spent a lot of Time Training nordstroms store staff and excited to share the bauble bar brand. Hard to manage inventory for stuff that doesnt sell . We have a fast fashion business model. Were introducing new product four times a week. A wonderful way to make sure were keeping it fresh and fun and dont have to take large positions on styles were unsure of. Thank you. Cofounders of bauble bar. A tip there for you, carl and david, when it comes to shopping for women. Right after the show. I tell you that. When we come back, henry blodgett, guest host for 11 00 squawk on the street, will talk about Michael Lewis, tech bubbles and the dow, up 125. [ male announcer ] when fixed income experts. Work with equity experts. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. But at xerox weve embraced a new role. Working behind the scenes to provide companies with services. Like helping hr departments manage benefits and pensions for over 11 million employees. Reducing document costs by up to 30 . And processing 421 billion dollars in accounts payables each year. Helping thousands of companies simplify how work gets done. Hows that for an encore . With xerox, youre ready for real business. Welcome back to squawk on the street. Welcome back, robert. Great to talk to you. All right. Listen. While you were working on a documentary really about china, how china fooled the world, a couple of things ended up on the editing floor that are today a little bit more interesting. Can you explain . Well, i thought they were quite interesting at the time, they just didnt quite fit into my basic story of the documentary, which is the extent to which china has borrowed way too much and having tremendous or will have tremendous difficulty managing its debt over the coming months and years. But one of the people we spoke to it was your former treasury secretary hank paulson. And he volunteered some extraordinary recollections from a time of the 2008 banking crisis. And in particular he was talking about the concerns they had about propping up fannie mae and freddie mac. And one of the stories he told us on camera was that he was talking to one of the very significance in the Chinese Government who disclosed to him that the russians had been in touch with the chinese with a proposal that the chinese and the russians should heavily sell the debt of to mortgage agencies in order to embarrass the u. S. Government. Look like a sort of guerilla tactic to cause, you know, your economy, the worlds biggest economy, some embarrassment. Let me stop you right there, robert. Because you nailed it in stopping there. So basically he was under the impression that russia would like to push china into poisoning their position well taking a bigger loss with a notion to move it from trading into kind of debt warfare. Was he totally serious . I mean, there was a lot of bluster lets be clear. Theres no doubt in my mind he completely believed the chinese were in earnest about all of this in the sense that the chinese were in earnest that the russians had talked to them about it. Yeah, i mean, he absolutely took it at face value. This wasnt his idea of a joke. He talked about it to illustrate quite how what was at stake in those hairy days. Robert, let me interrupt you now because were getting close to the end. Go. On the record when he was talking about the topic of china he also said some things along the lines of, you know, trying to quell some of the nervousness. Dont worry, the political theater you see behind the scenes, forget about that, i will make things happen to help your position along. I found that a bit disturbing as well. Your final thoughts in the last 20 seconds about how he viewed himself versus politics. Well, i mean, he was somebody as you know who always felt there was a deal to be done. And i guess the great question for all of us these days given there are all these former Goldman Sachs people all in positions of power everywhere is the Goldman Sachs deal mentality the best way to run the economy or not . Robert, thats a Perfect Place to end. Thank you very much for taking the time. Back to carl and the squawk on the street crew. Thank you, sir. Rick, thanks so much. Lets get a market flash. Sheila. Nasdaq we are showing nice gains on the last day of trading quarter. In fact, the nasdaq composite 100 up by more than 1 if we can hang onto these gains we are finally talking about a positive quarter for the nasdaq though the month of march will still be posting declines. One of the big reasons we are seeing a bounceback is because of the biotechs. The biotech index is back up 2 today. Remember, this is a sector that has been battered over the several couple of weeks. Two to talk about, biogen and amgen seeing positive results from its cholesterol drug. Momentum stocks, a trade everyone has been talking about is momentum trade. Weve seen high flying stocks come back down to earth, today we are seeing mixed action, facebook higher, Green Mountain coffee and tesla lower. Perhaps investors are getting more conscious about what stocks theyre picking. And microsoft old tech is winning. Thats one of the big winners of the quarter that stock hitting a near 14year high today. We havent seen these levels since july 2000. Back to you. Sheila, thanks so much. An update on whats going on over at the nasdaq. And the dow too, sarah, up 120. Not a bad wi to end out the quarter. Im here with peter costa, empire executions down here on the floor. Last day of the quarter. Looks like were going to end on a positive note. How does this set us up for whats Going Forward . As far as setting us up for the second quarter, i think were probably going to see a much better market in the second quarter. I think were going to start seeing better numbers come in, better than weve already seen. On the economic front . On the economic front. You always worry about a little geopolitical issues with the ukraine and russians, but right now i think the investors arent even thinking about that. I think theyre trying to set themselves up. Earning season starts next week. The jobs number is going to be very important. I think its going tor very important. Normally i usually look to the downside or lowest end of it. Im looking to the much higher side. I think were going to be very pleasantly surprised going into friday after we get the numbers i think its going to be well over 200,000. Possibly as much as 300,000. Thats the prevailing sentiment right now . Positive . I think a lot of people are starting to look at that weatherrelated stuff is past us now. But the fed, its still out there. And the prospect of we already know what theyre doing. Its not like theres any surprises. Even if they cut, you know, another 10 billion from qe3, its really not going to make much difference. The economys starting to do better. Lastly, the most important thing is that where else are you going to put your money . Treasuries still arent paying anything. Stocks are still, you know, a little risky. Put a little risk on, make a little money. Heard that argument before. Peter, good to get the color from you on the floor of empire solutions. With that, carl, back to you. Interesting discussion with the jobs number and whether or not the markets rigged and yellen basically saying the unemployment picture continues to see a lot of slack, a dovish message after her testimony a couple weeks ago. If youre just joining us this morning, heres what you missed earlier on. Welcome to squawk on the street, heres whats happened so far. Now, Michael Lewis has a 60 minutes franchise. They will not lay a glove on him. But it doesnt matter. When all is said and done, nothing will happen because theyre more powerful than he is. Heres a look at the bell. Its a great day for baseball. Opening days always special. Why not make it a holiday . We need to get back above that 200,000 number to really demonstrate that as the weather warms up the economy will heat up. Theyre contemplating a spinout of the retail business, which is a 12 billionish business. The most productive mall portfolio in the world bar none. And anybody who invests in real estate is going to have to own this stock and overweight it if they do it. It is 11 00 a. M. On the east coast, 8 00 a. M. Out west. Heres what were watching this morning, stocks in rally mode hanging onto a 120point gain. S p back to 187. A lot of discussion on the question is the stock market rigged . Weve got some answers on that, at least we hope we do. Plus, are Companies Like facebook, google and twitter way overvalued . Well talk about whos making that claim and why. And a Major Supreme Court case could have implications for many of the top Tech Companies. Joining us this hour, henry blodget, founder and ceo of business insider. Great to have you back. Good morning to you. Markets are doing well here. Nice open which you are probably familiar with have been selling off of late in the middle of the morning. Not so much today. Hanging onto some gains. S p just about. 5 away from an alltime closing high at 1872. Henry, youve been consistent saying stocks are overvalued, that a crash is possible, maybe not likely but possible. Wheres your head right now . Same. The longterm view all of the longterm valuation indicators that for a century have been very predictive over ten years, not over this week, next week, this year, next year, but over tenyear returns are basically saying we should be looking at very low returns over the next is this a shiller p e . Shiller p e is one of them. I know a lot of attention has been focused on that. People trying to debunk it. But you can look at gdptorevenue, many other measures. Each one you can come at it and say it doesnt account for this, it could be different this time. It could be different this time. Thats clear. Back in the 1990s i was in the camp saying it could be different this time. So far i got burned, carl. Now im in the its not different this time camp. Weve asked shiller about his p e for instance, and he says, yeah, its elevated. But that doesnt mean it cant elevate further. That is a fact. But to put it in perspective, it is higher than it has been at all but three points in the last century. The 2000 bubble in 1999, 1966 piece and 1929 piece. So i just wouldnt think i am so assured that im going to be fined because of that. Right. Now, you havent said what a catalyst might be. You havent said when a correction or a crash could come. Have you been anymore specific on that lately . I think it will be around Profit Margins at some point. We have record high Profit Margins. Every time this has happened in the past where weve been this extended one way or the other, theres been a very sharp reversion to the mean. No one sees it coming, but its sharp and violent taking the stock market down. Again, lots of good reasons why, hey, margins might just keep going up. But we are in record territory. Never stayed here before. Thats my concern. Its funny, we just had that conversation with a trader on the floor. One of his arguments is where else are you going to go . Rates dont look threatening. Yellen was dovish yet again today. What is the natural alternative to stocks, if anything . Well, important point. I own stocks, im not selling because the alternatives are terrible too. Bonds, we get into an inflationary environment youre going to get killed. Theres nothing there. At least you do have dividends with stocks. And the good news is even if you believe that nothing is changed over the next ten years we still have a positive return for stocks. So if youre in there for the longterm, i think you still got to be there. What i just hope people keep in mind is the likely return theyre going to get is not 20 a year or 15 a year. You havent been afraid to at least raise the idea of a crash. Meaning stocks fall 30 , right . Or more. A very compressed period of time . Absolutely possible. And going back to 2007, 1999, people dont see these things. And you say, oh, youre irresponsible to even talk about that. Come on. Stocks are very volatile. Thats why people usually have a diversified portfolio. If profits do break, they dont usually just sort of stay there and hum along. They usually go like that. If that happens youre going to see a big drawdown. You mentioned your history with previous cycles. And people are trying to draw comparisons today to 2000 given the valuations of companies that are being sold, given m a activity. Do you see anything wrong with those . We are nowhere near where we were in 1999 2000. For those of us who lived through that bubble, this is an insult to that bubble. Joe and others have drawn perspective, you look at scamore, youre looking at a business plan. Now youve got big valuations on some companies, but a lot of these Companies Still have very good fundamentals. Its not anywhere near as wild, but that doesnt mean you cant have a sharp correction. Weve seen that in tech last few weeks. People change their mind, get worried, valuations go down fast. Speaking of markets, we want to get to the story everyone is talking about today and that is whether the stock market is rigged so to speak. Michael lewis making that claim in his new book flash boys which focuses on High Frequency trading. He spoke to 60 minutes last night. Heres what he said. Who are the victims . Everybody who has an investment in the stock market. Theyre able to front run your order. What do you mean front run . Theyre able to identify your desire to buy shares in microsoft. And buy them in front of you. And sell them back to you at a higher price. A lot of outrage today. Not just because of what hes saying, which of course you would argue is morally wrong, but theres nothing new about it, people have been talking about it and it hasnt been fixed. Whats your thinking on this . I think that because hes identified something very specific, which is effectively riskless trading at your expense, shoud look into it, figure out if its the best way to go. I think the concept of the stock market being rigged is crazy. It is much less rigged now, if this is rigging, than it always used to be where you were a broker getting a Big Commission on the share. The big problem, carl, is that people who are trading casually, once in a while, often have no appreciation for how difficult it is to compete against professional investors who have extraordinary resources, experience, information at their fingerti fingertips. Folks have to lose in the stock market for others to win. And youre effectively walking on the field and trying to compete with the new york yankees. Thats the problem. And that is never talked about in this discussion. Are you saying this is a problem but it effects a limited pool of players and mom and pops shoul not worry . This affects everybody. In fact, if were losing a little bit of money in a Big Hedge Fund trading billions of dollars a year going to lose a lot more money than somebody trading a hundred shares here and there. But i think the big issue is we always try to talk about this level playing field, should be just as easy for everybody at home. It never will be. And the reason it never will be is that its incredibly difficult. And folks with 20 years of experience, mba, huge Research Departments spending 50 million a year talking to executives, everything else, they cant do it. So the idea that you can do it at home just because its safe and fair, thats the delusion that people have to get past. Doesnt sound like you think the exchange wills have a change of heart or banks or regulators for that matter. This is going to be with us forever. I think we should look at this. And merits a good regulatory investigation is it harmful, the argument is it creates more liquidity, which can be helpful. Its the same thing floor traders used to do, specialists creating liquidity. There was an argument that was a positive force. We should look at that and evaluate it. But i dont think in fm sense individuals are losing. So what degree does lewis himself change the dynamic if at all . I think he brings attention to it in and woerful way. Hes a great story teller. Im excited to read the book. But if folks are worried about it being rigged, its actually less rigged now than ilt used to be. Certainly the topic of discussion. Mark cuban will talk about it in the next hour and Michael Lewis will be on power lunch with a lot more on the new book that begins 1 00 p. M. Eastern time. That is tomorrow. By the way, we mentioned mark cuban, hes going to talk to scott wapner coming up at noon as well. When we come back, are facebook, google and twitter overvalued . Baron is making that case. And theres a Supreme Court case you might want to have your eye on because it has a lot of implications for a lot of big Tech Companies and software developers. More on that in just a minute. Switchgrass in argentina, d change engineering in dubai, aluminum production in south africa, and the Aerospace Industry in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. With investment information, risks, fees and expenses peace of mind is important when so we provide it services you bucan rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your information safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. Dow hanging onto a tripledigit gain. Look at i. T. Today, it is the Top Performing sector on the market. At least on the s p. Lets get to dominic chu for more on that. Very good day for the tech sector led by micron, one of the best performers in the s p 500. Its also about microsoft, a big gainer as well. Upgraded to outperform on friday by rbc capital markets. Oracle as well upgraded by canter fitzgerald on friday. Top five, Harris Corporation on an upgrade and autodesk about 2 to 6 to the upside. The bulls like seeing when tech and of course financials help lead the way higher. Back to you. Thats been one of the names to watch, dom, thanks a lot. Time for this mornings squawk feed. Henry blodget still with us and our own jon fortt joining us here at post nine as well. Good morning, jon. Good morning, carl. Barons trashing Tech Companies like facebook, google and twitter saying theres not enough ad dollars to support them all. Brings us to the question are we in the middle of the bubble . I dont think its so much about that. When you think about what facebook has been investing in lately, whatsapp, thats not an ad play. Theres only so much room to play with advertising. Google too. Nest not an app play. Neither some of the android stuff theyre doing in cars. But this is a bit of a game of musical chairs, i think. We all remember that game as kids. Theres not enough chairs for everybody. Thats why theyre competing so hard for talent. Thats why theyre trying to move into some of these ancillary areas. So i think overall this is right, but it doesnt necessarily mean that all of these companies are a bad bet. Maybe one or two of them. Henry, were talking about this is your house, man. This is your church, right . Again, knowing how different it is than 1999, google is trading at 30 times trailing earnings, not revenue, earnings. Even facebooks 100 time earnings, not revenue. Its very different. I think the three of them are different. Google, you go out a couple of years assuming they capture some growth, its 15 to 20 times earnings. Thats starting to be a reasonable multiple. Doesnt mean the stock cant come down, but its reasonable. Facebook and twitter very different. Much more speculative. In my opinion still much too much excitement about facebook and twitter. Really . Even facebook . The discovery of mobile, right . Some of the longer term plays that theyre making on things that arent assured. The growth of mobile has been spectacular. They pulled a rabbit out of the hat after the ipo stock went from 18 to almost 80 as a result of that. Now its pulling back. But this is a product cycle. And it all comes down to how much of the mobile worldwide they have rolled out. They were getting zero. Then they sold all this revenue in. Somewhere theyre going to fill up mobile and they better have Something Else left. Youve got to admit facebook has a couple things nobody else has. Their scale is incredible. And the personalization holy grail people searching around for even in the late 90s nobody was quite able to nail, facebook has the ingredients for that like no one else does. How far theyre able to take it is the question . Facebook is incredibly profitable, theyre investing, theyre being bold, whatsapp, oculus, thats great and to be commended. At some point its going to trade at 15 to 20 times earnings. Right now on the 2015 number even if they beat their number, still looking at 30. So that starts to worry me. I just remember being skeptical about apples valuation back when they were making ipods, so its all about the ingredients. Absolutely. But what is that product . If people start to get cautious, i think that valuation. Lets move to the Supreme Court case has a lot of major implications across the world of tech. Today the court is hearing arguments in a landmark Patent Infringement case that could restrict the types of software and computer programs that are eligible for patent protection back in 1980 a couple thousand patents a year, now were up to 40,000 patents, jon. The question is wheres the line . Its funny. All these companies are saying all of their patents are terrible. All mine are okay though. Ibm likes to tout the number of patents that its engineers come up with every year. Then on the other hand youve got nathan mirvold on the other side a lot of Companies Call him a patent control. Hes very much into collecting companies, individuals, who have patents that he can use in court to try to extract money. Its not clear to me that whatever the Supreme Court says is going to have that much impact on the big Tech Companies that have the resources to take these cases to court. Youve got so many different kinds of patents. Design patents where apple versus samsung, apples arguing this particular design of the ipad is patentable. Im not sure the Supreme Courts going to say anything thats going to address an innovative product like that and the claim of a johnny ive that no one had come up with this before so this rectangular with rounded edges should be protected. Henry, if youre a developer, youre watching closely. Listen, this is ridiculous. Occasionally we change rules in pro sports and add video replay. The patent system was not designed for software and design. The fact you can patent an idea, i thought of it before you did, i didnt do anything with it but i wrote down the idea and put it in a box and you have a good chance of winning and making me cough up later, that is ridiculous. Patents were designed for youve got to spend ten years testing a drug. That costs a lot of money. You need protection. Dont you want to preserve peoples right to their idea and the money that follows it . No. The idea is not execution. What about xerox park, if you have the graphical user interface in the basement somewhere, its an amazing invention, steve jobs comes down and sees theres value there. Shouldnt that be recognized . Absolutely not. If xerox wants to develop it, think of it first, get it into the marketplace and make it great for consumers and keep ma making it better. You dont need to be protected for that because you had somebody thinking and had an idea. Weve got to revise the system. Its true. Some of these companies that buy tens of thousands at once, its like a blue whale theres a line somewhere. Theres going to be a hard line to draw. Finally, the king is back, at least a little bit. Shares of candy crush maker king digital are rallying today. Of course, we remember the horrible i think you could only say it was a horrible day down 16 on day one. Now news on the heels of that that king is hiring 165 new jobs representing about 25 of its workforce. Looking at the numbers prior to the ipo it was shocking to me that anybody wanted to buy it. Theyre already rolling over. Its a single product. Weve seen what happens with hot games in the past. People get bored and they tank. So those earnings are going to go away on that game. So the question is can they have others anecdote i called around to a couple institutions before the deal, what are people seeing in this . I couldnt find an institution that was buying it. Im afraid it got sold to people not looking at it that way. I think its too binary, its either worth or a Terrible Company. Sure. I think it might be worth 4 billion market cap or 5, not seven. Theyve got one hit game, a couple other really strong games. They do have a pipeline for how they develop these things. Lets see whether they can develop that farm team into a real pro hit make. Franchise. 100 right. Theres absolutely a price at which it makes sense, but earnings for candy crush in particular are problematic. Yeah. Thats the same thing i was saying is we dont know what the steady state of candy crush is so its hard to value the company. You cant look at how much money they made last year. That half a billion off candy crush because next year its not any steady state of candy crush is the steady state of farmville. People get bored. And the key now will be managing their expenses, right . They are profitable, but managing expenses and hiring enough developers to make sure you do have a followon. Yeah, but not too many. Thats where zynga got into trouble trying to do the International Expansion creating that overhead too quickly they drank their own koolaid. You do have this spectacular new platform where you can roll out a game at zero cost, not to develop it but distribute it, can be on a billion phones in a week. So the earnings they put up shows the power of this, its staggering. But there are a lot of developers, very whimsical, you dont know what catches fire. Its like investing in a movie studio at the peak when the movie is out there on Opening Weekend and then watching it go. Thats tough. They dont need dozens of developers, they need the flappy bird back. Thats right. Final point, do you think the ipo window is crowded . I think that folks are now starting to take advantage. Its now or never. Yes. I dont know that its now or never, the big gain i think is alibaba. Thats a huge stock. We saw what happened with facebook when there was enough stock that anybody who wanted it got some, down we go from there. I think that could be that could mark the end. Thats going to be a life for a few months, jon. You know what i think, enterprise, the Boring Companies are about to have their hay heyday. When we come back after a period of greater calm, the greater l. A. Area has seen a series of earthquakes as you know over the past couple weeks. Does this mean the big one is coming sooner rather than later . Well look at that. And Rick Santelli watching Something Else today. Hey, rick. Im watching the same thing everybody else is, the water cooler topic of the day, hft. Im going to come at it from a tangent line a little different than everybody elses. A couple questions need to be asked. And im going to ask them bottom of the hour. Of the hour. 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. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back to squawk on the street. Check out shares of tempa pharmaceuticals. Moving higher on news the Supreme Court has agreed to hear an appeal in their top selling drug. Could introduce cheaper versions of this drug as soon as possibly may. Thats up about 4 right now on this particular news. Back to you. Dom, thank you so much. Lets get to the cme and check in with Rick Santelli. Good morning, rick. Good morning, carl. Thank you. You know, sometimes when you have complicated issues, sometimes even simple issues, you need to ask basic questions because its easy to get lost in the detail. So when it comes to High Frequency trading, the conversations ive had which really have nothing to do with the Michael Lewis last night directly, motive. Motive, motive without motive nothing else makes sense. So lets package this from a different vantage point. Are regulators stupid when it comes to High Frequency trade . Well, i think that there was a time where they were a bit slow to the party. But i dont think its stupidity or ignorance or not paying attention. So lets wipe that off. So the question im asking is, why do they let it continue . I mean, its a Pretty Simple question. I mean, do you really think that the regulators that could shut the spigot on this are in the dark and last night they had their epiphany . I dont think so. So if they let it keep going on, that means at least at this point in time in history thats what they want. Now, why is it that anybody would want hft to be unchallenged or at least not challenge it now . My reason, this is just my reason, when i look at the stock market its basically at historic highs. When i look at what the Federal Reserve is doing, its mostly to put stocks on alltime highs. When i look at all the debt and all the programs that dont seem to be making a difference except for putting stocks on alltime highs, i see that you have this tower of power with regard to the stock market. And nobody wants to challenge or alter hft because it good to go that many days without having a loss. So my guess is when the stock market eventually deals with reality and pricing, which will come at a time when theres not a zero Interest Rate policy and were long past qe, i think theyll address it. Some of the crazy things ive heard, well, you know, this is just like the old days, its an edge. No, no. In the old days a hedge meant you got a really good bidder offer and somebody hit you. These arent edges. What High Frequency trading is doing is putting the crumb in a box with a bow. Theres no risk. Theres no edge. Used to be worse in the past. Boy, that is the absolute worst excuse to do things that shouldnt be allowed to continue ive ever heard. Back to you. Rick, thanks so much. Rick santelli in chicago this morning. We want to bring in art cashin, director of floor operations at ubs. We have had this conversation many times, art. Yes, we have, going back to the flash crash and before. Yes. But to what degree is he changing the conversation on the floor today if at all . No, i think theres a chatty fallout. I mean, it was an obvious effort to promote the book. So you want to say the most earcatching phrase you can. And a rigged market is a prettier catching phrase. But many of the multidecade veterans like me around are not particularly fans of High Frequency trading nor of the rebate system thats helped build them. In fact, well, you and i have had this discussion, i think that was primarily a reason for the flash crash is people began to send orders to venues that turned out to be vacant hoping that they would get a better rebate there. And, you know, i think some of the High Frequency stuff is distorted. You hear numbers about them being 70 of the volume. That must mean they trip over each other because if, take mr. Lewis example, if i see you coming in as a buyer and i buy in front of you and then i sell back to you, which is my primary purpose, then i could only be 50 of the volume. So they must be doing Something Else to get more involved. People argue nothings going to be done about it until theres something to be gained from it, and right now that doesnt exist, they argue. Then they argue it will be used as a scapegoat if in fact the market does tumble hard. Do you agree . Well, again, it could cause some acceleration. Lets go back to that flash crash. If people are rapidly sending things to venues that arent very deep, you know, these fellas back here the marketmakers on the floor of the new york have a commitment to make a market. If youre a High Frequency trader off the floor, you dont have that commitment. Youre a fair weather trader. Youre there when you want to be. And that produces air pockets. So, yes, they can contribute to some of the velocity on the downside, but it will remain controversial until people fully itemize exactly what the costs are and who is paying those costs. And is there anything to the argument that its positive in some way or that its liquidity not always there but it helps you move bigger blocks of stock more easily . Well, that would be hard to see. I mean, if you follow mr. Lewis example as we just discussed, thats not adding a great deal of liquidity. Its adding volume, okay. Im making the volume perhaps 50 larger by buying just before you do and then selling it back to you. But im not adding to the liquidity. Im not making the offer any deeper. And im not making the bids any fuller. So its hard to see, you know. They provide more volume but in some ways its like static, it doesnt have a clear message to it. Finally, art, quickly, is april going to be any kinder than march . April tends to be despite the poets, mr. Elliots contention is the kindest month to the stock market historically. So well see. Particularly tomorrow has about a 70 up buyer. Well cross our fingers and hope that lives up to it, unless the High Frequency traders come in. Art, thank you. Art cashin here wearing his Blind Squirrel tie which i just tweeted and people adore. Thank you, sir. Thank you. Marijuana still legal in colorado, but hemp is a whole other story. Find out what the federal government is saying about growth and the production of hemp later on. Dows given up not quite half the gains. Were up 92. Were up 92. Aflac. Aflac, aflac, aflac [ both sigh ] ugh you told me he was good, dude. Yeah he stinks at golf. But he was great at getting my claim paid fast. How fast . Mine got paid in 4 days. Wow. Thats awesome. Is that legal . Big fat no. [ male announcer ] find out how fast aflac can pay you at aflac. Com. [ male announcer ] when fixed income experts. Work with equity experts. Who work with regional experts. Who work with Portfolio Management experts, thats when expertise happens. Mfs. Because there is no expertise without collaboration. Welcome back. Markets closing around the uk and across Continental Europe on a day in which some new data did show eurozone inflation slowing to levels since not seen november 09. Consumer prices up only. 5 in march down from. 7 in february. The results did add some pressure on the ecb to take some steps to combat the threat of deflation around the continent. Central banks policy meeting is coming up on thursday. Heres a look at how the broader markets finished the First Quarter, stock 600 outperformed the s p. And among the big winners in europe swiss drug maker novartis ended trial after treatment showed good results. And ing anoubsed resume paying dividends in 2015. A 5. 1 magnitude earthquake hit california late friday night, and more than 100 aftershocks have been felt in the area since then. Now people are out west are wondering is this a preview of something bigger down the road . Our jane wells is live in fullerton, california, with more. Jane, good morning. Reporter hey, carl. This house behind me is red tagged and four others on this street are as well even though we are seeing people come out of them. One local resident were not far from disneyland here, said friday night is like an eticket ride. If you look at Surveillance Video of how it looked friday night, theres been another home red tagged, at least one and a commercial building authorities are not letting people go back into. One local Elementary School is closed for the day as they assess the damage. As you said there have been well over 100 aftershocks from that 5. 1 quake. Cal tech calls that a normal pattern. It appears though that our quake drought in l. A. Is over. Heres the problem with this latest tembler. The fault runs under downtown l. A. And into hollywood, its a heavily populated corridor. The same system caused the 1957 quake which youre seeing file tape of now. Its not the recent quake but the one from 1987. Excuse me. That was a 5. 9. Wow, excuse me, guys. A 5. 9 which killed eight people and caused over 350 million damage. Thats in 1987 dollars. Seismologists say a strong quake in this fault system is far more dangerous to los angeles than the socalled big one that if and when will eventually hit the San Andreas Fault. Theyre saying a 7. 5 quake on this system would be far more fatal, would kill a lot more people, than an 8 and above on the San Andreas Fault which is way over that way, perhaps as many as ten times people, 18,000. As for the damage, carl, theyre saying damage could be a quartertrillion dollars. Back to you. Jane, youve been through a number of these. Has this series of aftershocks felt more any different than the ones in the past in your experience . Reporter no, no. The strongest one was over a 4. Usually the strongest one hits 24 hours after the earthquake. And that was the case in this case too. Its just that its been such a long time that weve had a quake you could really feel with a series of aftershocks. In fact, this quake actually had a few 4 shocks which got people scared ahead of time. That it stirs up the old memories. Its been a long time since the people around here have had that feeling in their stomach that, oh, whats going on, whats going on. Now its happened a couple times in the last few weeks. With all that aside, jane, happy birthday. Its always good having you. See you soon. Jane wells out west for us today. Reporter thank you. When we come back, hemp is illegal under federal law, but it has a ton of uses. Ask woody harrellson, from fiberglass to cooking oil to clothes made around the world. Now that pot is legal in colorado, growth and production are ramping up across the state. Well tell you about some of the hemps Economic Risks and rewards when squawk continues. E. With all the opinions about stocks out there, how do you know which ones to follow . The equity summary score consolidates the ratings of up to 10 independent Research Providers into a single score thats weighted based on how accurate theyve been in the past. Im Howard Spielberg of fidelity investments. The equity summary score is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Beautiful day in baltimore where most people probably know that geico could save them money on car insurance, right . You see the thing is geico, well, could help them save on boat insurance too. Hey okay. Im ready to come in now. Hello . Im trying my best. Seriously, im. Im serious. Request to come ashore. Geico. Saving people money on more than just car insurance. [ 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. Coming up atd the top of the hour, it is the last trading day of the First Quarter and were wrapping it all up with our competition for trader of the year. Find out whos leading and why and who has some serious catching up to do. And Michael Lewis making waves accusing the u. S. Stock market of being rigged. So mark cuban, hes one of the most outspoken opponents of High Frequency trading, hes going to join us live in a cnbc exclusive. All that straight ahead top of the hour. Carl, see you in about 20. I cannot wait for that, scott, thanks a lot. You can grow it, but at your own risk. Thats what state regulators in colorado warned applicants wanting to grow hemp. 21 of which were approved friday to farm the crop. The state adopted its First Industrial hemp rules late last year, began registering producers this month. Even though growing hemp is still considered illegal under federal law. So what are the Economic Opportunities and big risks here . Juan karl carlton is Deputy Commissioner of colorados department of agricultural and joins us today. Great to be with you. Lets talk about the differences between hemp and pot itself, thc levels. What do people need to know . Why is it considered taboo to some degree . Well, under federal law, particularly under the controlled substance act, theres no distinction made. Theyre considered one in the same. But the reality is Industrial Hemp has threetenths of 1 of thc or less. Thc of course is the intoxicating ingredient found in marijuana. Marijuana tends to have 10 to 15 of thc. So theres a significant difference. In fact, Industrial Hemp has, you know, very, very little thc. How big do you think this could be in colorado . Well, we think that there is substantial promise, you know, great potential. I know there have been studies that have identified about 25,000 products Industrial Hemp can be used for. You know, this runs the range from, you know, cosmetics and lotions and soap and clothing and pharmaceuticals and a variety of things. I think in 2012 the estimate was that retail sales of hempbased products was somewhere between 450 million and 500 million. So theres certainly a lot of potential there. Ron, focusing on pot for a minute. All the stories we get in new york is that legalization has been just great for the state. You have more tax revenue, better quality, any downsides people wondering around stoned all the time. Should every state legalize pot immediately . Well, you know, thats going to be up for every state to decide for themselves what they want to do with that. I mean, i think things for the most part in colorado have gone pretty smoothly. And theres certainly been some, you know, significant revenues tax revenues that have been brought in as a result. But i think, you know, were still early in this. And i think were going to have to see how things go. And like i said, every state is simply going to have to decide for itself how they want to proceed with that. I cant imagine being the agriculture chief or even the deputy in a state that just legalized pot. Has it changed your life or the way you run your office . Well, not really. I mean, whats changed is of course we dont have any Regulatory Authority over marijuana. So thats one thing. The Regulatory Authority giving to us was with Industrial Hemp. Thats certainly taken a fair amount of time getting a regulatory structure up and running. And so, you know, but were there. The program has begun. It began on march 1st when registrations began. And well have a Registration Period that will last until may 1st. So its a twomonth window. And, you know, things are hopping, things are happening. And well see how this ultimately ends up. Talk about it from the farmers perspective. Is it hard to grow . Whats the season . And would i be likely to, if i had a field of say i had some beans, would i switch that into hemp . Can that be done . Well, those are all very good questions. And i think that over this first year or two or three were going to learn a lot about how hemp is cultivated. The growing conditions, whats best, what seed varieties prosper in this climate. So theres a little bit of learning thats going to be taking place here early on. You know, as far as our farmers, you know, once they begin cultivating or once they start taking a look at Industrial Hemp, you know, its going to be like any other crop. What are the Commodity Prices going to be . Are the prices going to be such that it will entice them to move production away from soybeans or wheat or corn into hemp . Thats just going to be a basic economic decision. I mean, you know, can they profitably grow Industrial Hemp . Thats something we just dont know yet. Theres not really a market in place for Industrial Hemp, so this is something thats going to have to develop over time. And there are other factors. You know, i mentioned that 25,000 products can be made with Industrial Hemp. It doesnt mean that they will be. You know, manufacturers and processors are going to be price sensitive. And, you know, they may use hemp and they may not. And that may affect the prices that farmers get. Risk Management Strategies flt right now you cant get crop insurance. Right. I think before somebody sinks thousands of dollars into the ground to cultivate Industrial Hemp, thats something theyre going to have to think about. The question will be will there be Risk Management products available over time. Right. I mean, you guys, thats what happens when you create an industry from scratch as you are apparently doing twice. That will take time. Time will tell as they like to say, ron. Thank you so much for your time. Interesting economic story. Ron carlton joining us from the Colorado Department of agriculture. When we come back, diet soda may be a lot more dangerous for you than you originally thought. Were going to go behind a controversial new study when we return. Return. 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. Peace of mind is important when so we provide it services you bucan rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your information safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. Youve heard about the dangers of diet sodas before, but new Research Says they now may be more dangerous than we originally thought. Sarah is back at post nine with some details on that. Lay it on us, sarah. More negative headlines. Bottom line is diet is out. After years of growth diet drinks have become a drag on business at the beverage giants. The negative news like this weekend does not help. A new study out from the university of iowa finding that post menopause women who drink two or more a day were more likely to have a cardiovascular event. 50 of them more likely to die from a related disease. The Beverage Association disputes the facts saying theres no evidence of causation. Clearly its a debate, but its not the first time that youve seen a study like this questioning the side effects of diet. So youve got the Health Concerns out there, and youve also got taste changes out there, especially among young people getting increasingly turned off by the taste of diet. And all of this is adding up. And its hurting sales. You hear about the decline a lot in soda sales across north america. Well, it turns out diet drink volumes are actually declining at a faster rate than regular soda. Its a trend that really played out last year. A longtime beverage analyst looked at a ninemonth period of retail data up to last fall, numbers are staggering. Coke soda volumes were down over 8 , diet dropped 5. 9 over the period. Pepsico, almost doubled. Diet declines outpaced overall. According to the latest neilsen data, the slide continues for dollar sales. Bottled water, liquid teas, thats whats becoming popular. In fact really fast growth, guys, in sparkling water sales. And also Energy Drinks are all the rage right now especially for young people. The industries on top of it, ceo of pepsico acknowledged people were falling out of love with the artificial sweeteners. Called it a fundamental shift. On last Earnings Call talked about the drag of diet sales and blamed, in fact, the overall soda sales on the decline in diets. Thats incredible. Those are stunning numbers. If youre coke or pepsi, what do you do . Innovate or die. You hear it in number of industries. Analysts are optimistic this year on these beverage giants and on this innovation. Pepsi for instance is selling pepsi next in france and in australia coke is selling coke life in argentina looking at sugar and stevia, midcalorie drinks instead of the traditional sweeteners were used to. Dr pepper snapple also checking it out. It depends on how fast they can adapt to the changes, but because of the sales slide and increasingly recognizing this is a consumer shift, can they innovate fast enough in 2014 on the new drinks . Can we also start to conclude pretty much everything we are sold by big food and big drink companies that purports to give us a free lunch, tastes great, no fat, no nothing, is in fact you know going to prove in 20 years to be horrible for us now that fat is good again, you can eat butter, dont have to eat all the fake things that were made to save us from those . Yeah. I think youre hitting on a trend that youve seen with big food and big drink. And that is an increasing skepticism on the part of the consumers. Look at gmos for instance. This movement against gmos when people dont know exactly what they are or how harmful. Increasing skepticism. Goes to a different sense in the ongoing fight in the breakfast wars, mcdonalds and taco bell at each others floats for a while. Today mcdonalds tweeted out in response to the waffle taco ad this saying imitation is the sincerest form of flattery. I mean, they used to not mention their rivals. Now the gloves have come off to some degree. Interesting marketing techniques. Well, its a 50 billion breakfast market. Mcdonalds has to defend its turf. Clearly getting challenge from taco bell. Thanks, sara. Straight ahead, big blue making a big bet on big data. Well get some details on that after the break. After the break. These dont look clean. [ doorbell rings ] the johnsons stall them. First word. Uh. Chicken . Hi, cascade kitchen counselor. Stop stalling and start shining with cascade platinum packs. Over time, platinum fights cloudy residue 3x better than the competing gel. Its so powerful it even helps keep the dishwasher sparkling. Avoid embarrassing moments. At least for your dishes. Cascade. Beyond clean and shine every time. How did i know . Well, i didnt really. See, i figured low testosterone would decrease my sex drive. But when i started losing energy and became moody. Thats when i had an honest conversation with my doctor. We discussed all the symptoms. Then he gave me some blood tests. Showed it was low t. Thats it. It was a number not just me. [ male announcer ] today, men with low t have androgel 1. 62 testosterone gel. The 1 prescribed topical testosterone replacement therapy, increases testosterone when used daily. Women and children should avoid contact with application sites. Discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman, which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. Men with Breast Cancer or who have or might have prostate cancer, and women who are or may become pregnant or are breastfeeding, should not use androgel. Serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. Tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. So. What do men do when a numbers too low . Turn it up [ male announcer ] in a clinical study, over 80 of treated men had their t levels restored to normal. Talk to your doctor about all your symptoms. Get the blood tests. Change your number. Turn it up. Androgel 1. 62 . Welcome back. Intel is making a 740 million bet on big data. Jon fortts here with more on their latest bet. Jon, what do we have . They announced last week but a little more details come out an 18 stake value in 4 billion. Think of cloudera they make this framework for the big data era, allows you to analyze, comb through data a lot more quickly, a lot of big companies, a lot of fortune using it. They compete with horton works, compete with emcs pivotal division. Really important as were getting all this data to be able to understand what it does. The scale of this though its similar to the Wind River Systems acquisition that intel did five years ago. That was close to 900 million. But this is a lot of money for them to put into something. Its important for them because their server business is increasingly important as the pete sea flattens out and declines. Big data gives people reason to use the line. But this shift toward enterprise we started to talk about a bit continues to happen. We have s1 looking to raise a couple hundred million dollars. So lots of interesting activity. I hope their commitment is stronger than it was to television which lasted about five minutes, right . Well, theyve got real money on the line in this now. They talked a lot about television, but i dont recall them plunking down 740 million. Yeah. Thats good. Well watch it. I know you like the space, jon. You keep talking about it more and more. Jon fortt on intel and big data. If you watched 60 minutes last night, there was the john lewis interview, but listen to elon musk. How did you figure you were going to start a car company and be successful at it . I didnt think tesla would be successful. I thought we would most likely fail. But i thought we could address the false perception that people had an electric car had to be ugly and slow and boring like a golf cart. But you didnt expect the company to be success . Then why try . If somethings important enough, you should try even if total outcome is failure. Some said the implication of musk took place last night. Henry, what do you think . He deserves it. Look what hes done out of nothing. Built tesla, spacex. With a little help. Sure, with a lot of other people, but he is the prime force behind this. When you get into the tesla story and you realize how close that company was to failure, and the fact he put in pretty much every last penny he had, i mean, he went to the table and he bet it. So this idea, yes, other people helped. Obviously huge company, amazing products. But he is a classic example of an entrepreneur and venture capitalist actually risking a lot in trying to do this thing is ultimately amazing. How about this Morgan Stanley note from a couple months ago said theyre not a car Company Really going to run utilities and the grid, multitrillion dollar businesses around the world. I want to see if theyre really teaming up with apple to do something in batteries here. Some rumors have been theres clearly interest from both of them in battery technology. If we see that, then that puts all of this in a different context as far as where he can push things. Anything is possible. Pretty much bull market thinking. They like the company, they like the fact the stock is going up. Theyre finding ways to tell themselves stories that can justify even higher valuations. Doesnt mean theyre wrong. But the higher the price goes the more has to go right for tesla over time to justify it. And at some point one thing we can be pretty sure of is that tesla just like every other company is going to trade at 15 to 20 times you keep coming back to that. It actually has youve got to tell yourself a story where at some point tesla trades at that. Unless you want to say teslas going to be different forever. We can throw out all valuations. One good thing with this going back to the 90s, cisco, all these companies, people say, no, its different, its tech. Theyre all trading at 12 times earnings now. So its actually happened. Yes. This will happen to all of todays darlings too. The question is when. The question is when. And also can they get to that number . Youve got to believe they can, or you should sell them. Henry, good insight. Thanks for sticking around for the hour today. Henry blodget, our own jon fortt. Wapner is up next, what a hour, cuban and a lot more. Last trading day of the quarter, talk about the rally on the street today, snapback were seeing as well and mark cuban will be coming up to talk about High Frequency trading. You have a great rest of the day after a great few hours there down on wall street. Welcome to halftime report. Todays game plan, fair markets, stock markets. The United States stock market, the most iconic market in global capitalism is rigged. Do High Frequency traders really have an edge over all of