Transcripts For CNBC Squawk On The Street 20140728

Zillow buying trulia 3. 5 billion all tock. Jack lew, oped calling for antiinversion tax legislation. Economic data capped off with monthly jobs report. Dollar tree acquiring Family Dollar 8. 5 billion, the value of Family Dollar 74. 50 a share, 24 prepare premium to the close friday. Comes more than a month after icahn called for Family Dollar to sell itself, thought it was going to be somebody else. Dollar general the name for a long time, we thought because of the great synergies that deal would bring, not without antitrust impedestrianti antiimpediments but Dollar General not the name, its dollar tree. Carl icahn may take credit but the approach made in march by dollar tree prior to mr. Icahn publicly coming into the shares. And so we know hes got a great nose, a great feel for these kind of situations. It was previous to that that Family Dollar told us it was at least exploring alternatives they did open up that process in the winter. They got approached by dollar tree. The big question that everybodys asking, where is Dollar General . Based on conversations ive had they were aware of the process. I dont have the answer to whether or not they believed they were only bidder and therefore were not moving with all apparent speed. Also, the decision by their ceo to step down next year may have figured into their not participating here. For this deal, its 11. 3 times trailing 12 months ebitda, that is march to march 14, a high multiple. Dollar general in 2005 or 06 done at 11. 1 times. Theyre saying we got a great multiple. Without Dollar General being a part they did well for shareholders. Dollar tree stock above the top of the collar, socalled collar where conserve val ushg if it were to fall, it rising sharply. Anything above 59, whatever it is, 59. 84, 59 excuse me, going to trigger the top of the range, 59. 98, thank you. So it is trading above that. Well, look, ive got to tell you, someone who follows the sector closely, dollar tree has been a magnificent operator. They had a focused yes, its end a dollar, we have named brands, yes, stores are clean, i want to contrast, however, Family Dollar never understood the pricing factors, theyve got a lot of stores that werent nice looking at all, youve got a dollar tree management coming in, creating the largest dollar chain into n. A mark where we always see stock prices up, always think that people in the country are doing well and we go out into the real world and this is where people shop. Thats me, well, i go to dollar tree quite a bit. I have a fabulous one near dollar tree, everythings a buck or less. The dollar tree format Family Dollar is multiple price points. And they will be moving into that. See the tweet . I do like i go to dollar tree quite a bit. Heaven on earth at dltr . The candy aisle. The candy aisles extraordinary. A lot of these are next to a harmon or cvs and you match the prices and youre blown away. I know the sometimes its smaller but my managers assured me over and over, i believe if the stuff is just as fresh. I think it really is. Amazing, people do not understand from new york city, i find theres a big bias, dollar tree is a place you go for all of your seasonals. Its july 4th, you go to dollar. Its halloween, go to these are just exciting places to go. I know that sounds hard to believe. They are. They are clean, wellmanaged, beautiful. Theyre going to be a larger operate, as we know. Before we move on to another big deal, one that we one with big napes 305 million breakup fee, Voting Agreement, not that important. Talk about this because still a possibility that Dollar General will reconsider, perhaps try to go over the top . Something ill be trying to find out or report on. 16 Voting Agreement with trian and Howard Levine saying theyll vote in faber of the deal, 305 million breakup fee that would give another bidder pause, perhaps, not that its unusually large, it is not. No financing contingency. But you know, well see from here. In terms of consolidation in this arena, walmart choosing not to play, in terms of getting bigger but goingite o ing its o. Dollar general stock going down, not participating in a deal that has more synergies than the 300 million synergies in this deal. Remember, these are urban places to shop. Family dollar used to love the idea, finding that area in the lower middle class area by the way, in are keeping brands, theyre not going to merge brands. Le reason is running the Family Dollar brand. Right. And on the board. Howard is a universally liked individual that does, i think i know it sounds strange can come into play, no one wants to dunk howard. The largest retail deal of the year. In fact the fourth biggest ever, biggest since macys bought may, if you can believe that. Really . Yeah. Incredible. Yes. I will tell you that if you get that Family Dollar management out in terms of the way the stores look, you bring dollar tree in, youve got a juggernaut, a price point that people underestimate. The barbell, its tiffanys and dollar tree. Theres little room in between. Walmart and target struggled so much. Two online Real Estate Firms hooking up, zillow agreeing to acquire trulia for 3. 5 billion. The deal expected to close in 2015. Stay tuned for a live and first on cnbc interview with zillows ceo Spencer Rascoff at 11 00 a. M. Will this eliminate the possibility hes going to become a cohost . We make jokes about spencer, hes the most open ceo ive come across. He did say he would destroy trulia, when he was on mad money basically that didnt work out. No. Hes making them happy or shareholders conceivably. Its all stock, of course. Its one valuation for another valuation, creating what i assume significant costs cost savings and i mean im curious to see how the stocks are reacting. We see zillow down a bit. Zillow ran up so much, such an open secret, those who have used zillow, two zillows, the zillow in the rest of the country and the zillow that didnt work in new york, bought a listing system in new york and zillow came on strong. Speak to the big Real Estate Companies that are public, theyve embraced zillow. Initially they wanted to put zillow out of business. They have no choice. This is one very expensive on earning stock. Its now up there in the pantheon of stocks almost like yes, tesla, almost like twitter, hard to value now. But it is become overnight its not a monopoly. 444 shares of zillow, implied price this hit not long ago. I dont know if youve had time to do the math in terms of a multiple here, i have not. When i was getting may up, i know it seems natural. Never. Nobody would know. 100 million in annualized cost 2016. Baby steps. Thats a ways away. Another story keep both brands and flint will report to rascoff. Trulia site was kind of leapfrog zillows one time, zillow came back. These companies are really fabulous at mobile. Zillows mobile app made zillow do quite well its one of the few companies that mastered mobile in an effective way. At the same time, expensive. Quite a multiple theyre paying at this point. Well check in on this as we get more data behind it. Could another tax inversion deal be in the works . Ho hospira, moving abroad for tax purposes. Calling on congress to pass retroactive antiinversion ledgization as soon as possible. He writes, reform will make the United States an even more attractive place to do business and ensure capital and talent are allocated more efficiently in pursuit of High Economic returns rather than low tax bills. Its interesting, some discussion of whether the president could do this through some executive action without congressional approval. I asked jack lew that during our alpha conference, we know the irs, you can do a rule making process here, it could scare everybody because what would happen the general councils and the Legal Counsel involved in the m a would say, wait a second, theyre not waiting for congress. Theres a belief, the republicans will say this is all theyre all trying to raise rates, democrats, how they want to do this, democrats are saying republicans, its never going to happen. In the end, lew disagreed with me, there is a bill a way to do rule making that would scare off people, saying the benefits may not be yours the way you think they would be and that would freeze this. I believe it does not take congressional action. I have a minority view but im starting to get traction in this view. An executive action in some way that can change those to halt it in. Yes. Right now everybodys running for opportunity, as i pointed out last week, i think it was, theres more coming. Sense then weve had two new announcements. People want to get in close a deal before the end of the year. Right. If you that, you will be okay despite what the president might have said about retro activity if they were to get something done to april of this year. The idea next years more likely you would see even the idea of competitive tax reform, perhaps, and then some part of that including invergeance and retro activity. This year, people feel the playing field, the yardage ahead of you, run down it as quickly as you possibly can and get in on the inversion before it runs out. Medtronic covidien often cited as being a fantastic deal, two great companies. Pfizer downgrade today. We saw i tell you, some big cap drug companies, pfizer, glaxosmithkline all reporting this week, by the way. Tide turned against these guys in terms of research. But i do believe that when you look at i interviewed st. Jude med a fine company, sensing its unfair in their own cohort. But they have to figure something out. I noted that small deal a few weeks ago, because it was this spin version, is what they call it asset dropdown, now two more times with mylan, the abbott labs subsid dears why potentially the hospira deal with danone. Theyre like, they dont feel great about. To generate enormous profits from the sale because you have anxious companies willing to do an inversion. Did you respond to cubans tweet, any company that does this, im selling your stock immediately. Im responding the business is to try to get rich, one of the things ive thought about mark, ive known mark since the 80s, cubans wants people to be wealthy. One thing people cheer for cuban i believe that but cuban wants people to be wealthier. Im a man of marks, always have been. Cuban is doesnt like whats happening except if you own the shares and he said point blank, its great for shareholders until they close the loophole. If youre an individual shareholder, it generates Capital Gains tax, a new corporation, paying Capital Gains. The fact is, most of the companies are owned by institutions, they dont care, just gets passed along. If youre an individual holder or paying a big tax bill because of inversions, another thing. By the way, if youre the management, youre getting grossed up, theyre not paying that bill. Theyre not paying that bill in these deals. The ceo and senior managers, thats wrong. Thats wrong. Yes. To be a ceo bananas. Look, i felt the market looked im not ill use it, topiness to the market last week, being companies that deliver good earnings and stock werent going up, that was different from three weeks ago earnings season. The company im watching now, ill get to it, reported really good numbers and its not going up. Its almost as if whats left going up right now is takeout. And you need to see a broader market. Thats not what you want, to be down right now. It is a busy week for earnings. Of course from everybody, oil, pharma, media, insurers, well get the jobs number on friday, q2, gdp this week as well. Well break it down. First on cnbc interview with blackberry ceo, john chen, hear what he has to say about the smartphone makers valuation. Squawk on the street is back in a minute. Is very individual. White chocolate lovers dont like dark chocolate. Milk chocolate lovers dont necessarily like dark or white. Before we couldnt really allow the consumer to customize their chocolate. We needed a scalable Cloud Solution allowing them to select what they are looking for. Now there is endless opportunity to indulge. Customization is made with the ibm cloud. The ibm cloud is the cloud for business. Weits not justt wed be fabuilding jobs here,. Its helping our community. Siemens location here has just received a major order of wind turbines. It puts a huge smile on my face. Cause im like, this is what we do. the fact that iowa is leading the way in wind energy, im so proud, like, its just amazing. Digest. Six dow components xuing exxon mobile, twitter gopro, twoday fed meeting, slew of economic reports, the q2 gdp advance number, jim, theyre saying this is last big week of news and data until you get to the end of august. Really is. Its funny, eight weeks a year that were just got to bring your game. This week its interesting, the stocks you mentioned. Theres expectations are low, exxon, expectations low, clorox reports, whole foods coming in with a lower bar. The analysts have been negative, cautionary on these. That kind of helps. Last week, we came in with a higher bar, its almost as if the psychologys trading week to week. There may be it may help the stocks that people are looking for a little bit less. What im worried about, ipos, supply. Dont want to see too much supply because thats what overwhelmed up in march. Youre not going to get it until ali baba in september. The synchro anies. I think thats going to be taken up. Virgin america filing. Yeah. You can smell branson saying strike while the easterns hot. One of the things i didnt like about last week the only airline that benefitted from the earnings was united, which has been considered to be the poorest of carriers. I think that im focused on yahoo which will take the alibaba money and reinvent. Yelp regarded as being the zillow of the Food Restaurant business. I keep thinking if yahoo were to come after one of the companies with the cash, buy yelp horrendously expensive acquisition but it would get buzz you see what happened with zillow, zillow, analysts saying 50, 60, 70, zillow overvalued. In meantime zillow kept winning accounts with big Real Estate Companies, im saying that the extended social Media Companies which is what zillow was, which is what yelp is, they are going to be coveted by aol. Its all stock. Yahoo s not issuing stock. But look, the yahoo right now is the yahoo youre not going to recognize a year from now. Really . In a good or bad way. Good way. Shareholders better hope so. Why do we say that . Look how well the stocks done. Its alibaba. Has there been a turn . Has there been a turn in the core business . Honestly, why do we wear about why a stock goes up . What is its aings with ing what multiple should i assign the company now that i know what the value of alibaba is, they are selling less, theyre still selling. We were discussing last week whether alibaba buys yahoo . I mean, yahoos going to have a lot of capital. When a Balance Sheet is as great as yahoos a lot of things that can happen that are positive, thats all saming. Who got to you . Who got to you . Who got to me . Who got to you . Somebody tie you up in a room . Something happen we havent discussed. What happened . Alibabas going to work are you jim . Okay. Making sure. Alibabas going i gave a lecture this within thats where it happened. Somebody got to him at the library. Alibaba, the way to play alibaba all right. Alibabas got great growth characteristics. I have been pushing vip shop on you for some time. You have. One click, they call me one click cramer ive been clicking on vip shop. Cramers one click cramers mad dash as we count down to the opening bell. Squawk on the street continues. 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. 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These guys are not doing that. No, these guys are i want to explain to people periodically, a 26 stock is not necessarily cheaper than a 700 stock. Now, chipotle has a my multiple. There was a profitable First Quarter but this is this is, after gopro, the best acting ipo in the last couple of weeks. Be careful. If you like chipotle, play chipotle with chipotle. They are doing extraordinarily well. Even the stores where they have the signs which say, listen, we do not have Natural Organic beef because of a shortage. The samestore sales in those stores which you thought would be affected are just as strong as they were before. Chipotle doing many things right. Im trying to get chipotle. Pushing them to split, on air. Sure. Thats thats becoming a high priced stock. Keep your Retail Investor out. I dont want the Retail Investor confused. 17 samestore sales growth. What kind of multiple . By far the highest. I mean were worshipful of companies that have high, single digits. Incredible number. Starbucks came out on friday, 7 , which is really good, but everyone behind the scenes saying the same thing, darn it, chipotle wrecked it for us. They had the same weather we had, they had the same gloomy consumer we had, whether it be the container store, Dunkin Donuts say week dont know whats going on. Chipotle, we know whats going on, spend lit until advertising, managed to create an aura of you know what . If you want if you hate the food chain, go chipotle. One last thing, when you see the chinese food scares, people are saying, chipotle figured this out long ahead of everyone. Opening bell coming up after this. Ugh. Heartburn. Did someone say burn . Try alka seltzer reliefchews. They work just as fast and taste better than tums smoothies assorted fruit. Mmm. Amazing. Yeah, i get that a lot. Alka seltzer heartburn reliefchews. Enjoy the relief. Dovisit tripadvisor new york. With millions of reviews, tripadvisor makes any destination better. [b ll rings] time and sales data. Splitsecond stats. Its so close to the options floor, youll bust your brainbox. All on thinkorswim, from td ameritrade. Youre watching cnbcs squawk on the street, live from the Financial Capital of the world. Well get the opening bell in about 40 seconds. Coming off the dows worst week in seven, what a boatload of news over the next five sessions. Earnings from everyone, abnet, tesla, the fed meets, jobs friday, megadeals today. Go back to goepro, theres a lot of fascination. This is the quarter they reveal it is an ecosystem. The gopro movie to youtube is very, very powerful. Do not overlook the fact that this is getting beyond just youth on surfboards. Beyond that. I got the dog harness. The dog harness arrived why do you make a face . I think what can i tell you. My Sporting Good guy im a fuddyduddy. If there was worry gopro would not have the new addition in time for the holiday season, theyre promising retailers they will have the next iteration. Gopros like apple, in a sense people are waiting for iterations. Its weird. An important Consumer Movement for younger people. Cant keep our eyes off big gainers, Family Dollar and dollar tree, first and second place. You know, whats interesting, of course, dollar tree sharply higher. One would have expected were it to have been Dollar General, that similarly would have been up sharply, the synergies here, talking about 300 million run rate. There, if it had been Dollar General, larger, though a larger antitrust risk. Why do i mention it . Thats the big question. There were not that many people, jim who thought it would be dollar tree, that was not a nam. Was Dollar General and then maybe a walmart and then dollar tree, but apparently, my reporting indicates they reached out in march, after a process was begun, and they have been working on a deal sense then. Icahn, luckily for him got to shares in april, shook things up. Trian has been there a long time. Thats a very good point. Made a lot of money. Ed garthens on the board, one of the guys. Dollar tree the least promotional and bestrun in the cohort, and this is lit erally function if you have been to one versus Family Dollar, ive been to many dollar trees you want to get that Family Dollar run by these people, these nonpromotional owners of a category that is so right for this economy. I just think that the company is so wellrun. It goes a long way. Yeah. You mentioned cummins, one of the worst performers this morning. What was wrong with the number in. How could this not be enough . This company, im when it came out, stephanie lincoln, she and i corun cotrust. We had a tiff last week. She said the way these industrials are acting, even if cummins raises numbers, raises guidance, it may not matter. It comes out this morning, i say darn it the trust sold it they raised great number, they raised it. It didnt matter. This is what ive been worried about in the market. Is that nothing is enough for the industrials now. I mean maybe its because housing got weak in. Owens corning was bad, armstrong, people feel that though cummins put out a release saying the truck business is great in north america, it not enough. The buyer want too much from the industrials. This is a bad sign. Its a bad sign for the market, that cummins isnt up five. And what what do i if im if im aware of that being a bad sign and im an invest investor, what else am i keep ang eye on to see if this a pat zblern pe pattern. Tech is the next. Microsofts churning its wheels, intells been churning its wheels, not seeing the next leg up. Micron reported good number, not flying. Apple reported a good number, it peaked. Facebook was great but you need to see i hate to put pressure on twitter but twitter has to deliver something. Thats tomorrow night. Twitters going to maybe, in term of make or break, got a little work to do. Its a 22 million company, its smaller than the other name you mentioned. Not even in their league. I totally agree. Im talking about zeitgeist of the market. Twitter captures its like, facebook was good, ill buy twitter. Facebook is the only big cap tech stock that did well last week. I just worry that you get a lead off the health care stocks, we saw peaking in biotech. Remember, gill add, people are stopping me on street, whats with it . Gilead ran a great deal. I thought the celgnene was enough. Im not being bearish. Weve got to consolidate. This is consolidation action. Tyson told a division. Thats starting to come back. I dont like consolidation is not a dirty word. It happens to be where we are consolidating. Tyson was a miss, though sales, prices and volumes, all higher. Grain prices are down. China scandals a headwind for a lot of the companies, too. Im mcdonalds, we didnt talk about that, the big bread and fries, you know, you like that . Big bread and fries. The mac is missing. Yeah. Its a mac clause. Has there been a material adverse change . I keep thinking about what chipotle said to me, which is that the people globally are recognizing the food chain may be breaking down. The food chain meaning, you can just keep producing this inexpensive product and have it be high quality. I dont know, thats you talk to the biggest Animal Health company, weve got bovine growth hormone, well solve. The country and the world, worried about corrupt food chain. Yep. Wages also something that theres this movement to try to get the minimum wage for fast food workers up to 15 an hour. If people say Affordable Care act, Affordable Care acts a hot button. I said, listen the Affordable Care act could change whether employers cut back hiring. And people are say, why you hate obama . I said but you have it in for obama. No, no, its like if the costs more to hire people, maybe work people longer, maybe i should pay them overtime rather than have new health care. But its not a statement on obama. Goldman had a note last week, cut equities to neutral in the short term. Midnight downgrade occurred what . Friday, 7 0 at night. I love dade david, i was surprised. Bullish, 12 months but think the next 3 months are troublesome. Thats about rates. And i think when i read through the whole note, when i had a chance to reflect, i felt that it wasnt that bearish. Its kind of in sync with the consolidation thing im worried about. I didnt steal it from david. David does fine work. Always grade when hes on the show. Dow up two points. Good monday morning. Energy stocks doing better, material stocks. Solar stocks to the upside. I want to point out overseas, a heck of a rally in china. Fueling some of the emerging market rallies weve seen. Take a look at the shanghai index, up another 2. 4 . Look at that rally. Last three or four days, were up 6 or 7 . Some Economic News has been better. Emerging markets are back, led by chine nap the highest level of the year for the shanghai index. This has been a laggard for year, suddenly showing signs. Same with the hang seng. Were at the highest levels since 2011, thats a threemonth chart, also in the last four, five days to the upside. This interest in china is not just china, emerging markets in general are doing better. Low Interest Rate environment. People are skeptical about rally. I note last week e. M, put that up, thats at the highest level, exchangetraded fund for emerging markets, thats been up, largely pushed by china. But india, of course the elections there, that also pushed some of the indices, etfs tied to china, india brazil. Brazil moving up, too, prospects maybe the current elected government there may not survive the elections that are scheduled for the fall. So a lot of interesting things go on there. Zillow and trulia, i was the real estate reporter here 20 years ago, my wifes been a realtor 20 year, we have a lot of interest, jims line is correct, this business taking out the competition. Ill tell you whats fascinating, 20 years ago i did tons of stories saying Online Companies would eventually destroy the Realtor Commission and it never happened. Its still 5 , 6 . The reason it hasnt gone away, one, its very difficult to sell your own by itself, number two the Business Model of these Companies Like zillow does not involve put anything of the realtors out of business. They need realtors making commissions to pay for the Online Advertising 300 a month, whatever youre charging, they have Different Levels but they need those commissions in there. Whats concerning, this is a big combination, not a lot of online competition out there, not a lot of online places to go to advertiserealtor, but most realtors stop advertising in the local papers. They need these companies for advertising and the concern is now they could raise the rates with somewhat monopolistic business nothing else but the National Association of realtors site. Dollar tree and Family Dollar, nice moves up there. Look at that, 22 gain in Family Dollar. Earnings, cummins, the beef there. I agree, nothings going to satisfy everybody. Tyson nice move. Armstrong a disappointment. Not unexpected. Weve heard some of the diy, do it uawyourselfers, lowered 2014s guidance and revenue guidance. See what the ceo said, came out and acknowledged that, softer demand, weve experienced in the quarter and the first half of 2014, tempering our outlook. They dont see that diy market coming back in a big way. Talking about flooring. To a lesser extent, ceiling business, what theyre involved in. I want to note, talking about ipo market, nobodys waiting for anything to happen in september. They are dumping huge amounts of stuff on the market, 22 ipos this week, 6. 3 6. 6 billion we had friday, ill update that, including synchrony, 3 billion, half of the billion, one company this week, its going to price wednesday for thursday. My point, 22 companies, guys, this is the largest week for ipos in many years. Talk in term of the sheer numbers, 22 ipos. Theyre getting it done while they still can get it done. Back to you. Thanks a lot. Bob pisani. To the bond pits, Rick Santelli on this monday morning. Good morning. Treasuries still doing what theyve done, a lot lately, hoover either 3 to 4 basis points above or below 2. 5 mark look at one day and two day, especially two day, drifting this week of fed meetings, open the chart up to may. Still hovering above, and have not closed below the may 28th low yield close for the year, 2. 44. If we look at bund overseas, intraday, trading 113 handle. Current low yield, alltime record low close around 114 basis points, 114. Its getting potential here for new altime low yield close. Spreads the week of the fed meeting. One would think if the market thinks zero Interest Rate, a flattening yield curve would ensue. The 5s and 30s, record flat 155, a record back to january of 2009. Lets look at euro versus the dollar. Ho hovering at the lowest point, 134 handle since thanksgiving last year. Look at twoday chart of the dollar index. Off to a slow start. Its holding at rather stable and above where it closed 2013 levels. Carl, back to you. Thank you, Rick Santelli. When we come back, interview with blackberry ceo, john chen. Stock up almost 40 . Is the worst over . Speaking of ceos, Spencer Rascoff of zillow on his companys deal to buy trulia, live and first on cnbc later on squawk alley. In a world thats changing faster than ever, we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. As long as ive lived in iowa, strauss blue danube playing yyyup. With xfinity internet soyour family can use all their devices at once. Works anywhere in the house. Even in the garage. Max whats going on . Were doing a tech startup. Were going public [cheering] the fastest inhome wifi for your entire family. Only from xfinity. Blackberry Ceo John Chen sitting down for ace first on cnbc interview with jon fortt, commenting on customers and reactions to recent turnaround efforts. Take a listen. All very interested in our strategy, in our technology, where we want to go. I have now find that most people are no longer concerned about viability of the enterprise customers then like seeing whats happening. Im very grateful for that. Beginning of time always this talk. They believe well be around, they believe our value is there. We have extremely good uptake. Black barry shares up 38 . Johns here to debrief us on what he said. Key is enterprise here. Even when in comes to blackberry messenger, people are hoping will be a competitor to whats app line, number 63 in the social media cat dpoegory in thp store. Chen looking to position this also as an enterprise play. Hes in town talking to financial institutions, one of the three pillars for them, government financial and pharma, they want to shore up. Hes interested in doing an enterprise partnership. Doesnt want to spend a lot 0 money building up an Enterprise Sales force, want to to partner with somebody who has that, security and r d wise. Agnostic about hardware as ever. No, theyve got the bla blackberry passport, odd shaped phone, why they want to do that. He thinks in certain security heavy areas in government and enterprise, people will carry two devices. Want as i device for blackberry ois to be one. How about the apple deal . I keep thinking ibm comes in, give you the iphone, sync it up at home, isnt blackberry, the guys most heart. John acknowledged that could be a problem. He did acknowledge it. The general thing, they always say, hey its good for the spashgs blce but said there concerns here. Were want to do a partnership but believes the security play is one where they could do better than the other. Quietly telling people that ibm is going to come out agnostic on that security i cannot wait for that interview. Hes a candid man. Im so glad to hear they didnt just give the boiler plate. Love that about him. A busy day for jon so far. From selling his company to star bucks to transforming ak7s into july rip the entrepreneur later on squawk alley. Dow down 47 points. Collection is here. 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Good Footwear Group saying this goes hold to sell, i think its got a lot of cash. Feels like a lot of companies that get down there, a sycamore sakes an interesting p e guy says we can do that. Do not sell designer shoe warehouse, dsw, theres a sketchers and deckers saying, listen, women are back buying shoes. They buy at dsw. Secondly, a note, a lot of people saying anadarko has run way too much. This has been on fire since the legal settlement. Credit suisse this morning, knowing that they report tomorrow, okay, raised the price target, talking about a Minerals Division unappreciated and put out a release, we want to monetize assets. Apc rumored, something could happen dont own it for that, its an inexpensive stock versus the others, pioneer. I like the call, stay long anadarko, makes sense, a lot of option activity. When you Say Something could happen, referring to consolidation. Megacap consolidation in the energy sector. That, i think, the last of it, i think megacap, oil and gas is about to happen. Saw mlp action last week, a prelude. Yes. Megacap oil as to happen the majors, they need to grow. They need to grow. They dont want to shrink to grow. They want to grow to grow. Ive got a fiver in m a land. Only solution, more m a. Correct. I was in the permian late last week and all of the cops are women because all of the guys have gone into the oil and gas business. Incredible what the economys like world war ii. Its rosie the ticket righter. Doing all sorts of stuff. Didnt you see fargo. A couple of names to report in the morning, merck and pfizer, bmo accepts in front of the quart on pfizer. I think pfizers a company thats challenged on a patent basis. Theres a lot they can still do but wanted to do that astrazeneca deal. Nothing says they may not come back for as tra dtrazeneca if you try to sell merck, that companys been able to pull many rabbits out of many hats. I happen to love the Animal Health business. Merck can go to 55, nfc to 65. You talked about zeitgeist earlier. Well get twitter tomorrow. Gopro and tesla thursday. I assume you think those are the biggest contributors to mine sense. Yes. People want to come back to the market because you see the averages but they dont come back to the market and say im going to buy intel. Intel fascinates no one. Im not going to buy microsoft. Im going to buy gopro, which i think theyll be rewarded, twitter, battlegrounds are hard. Forget herbalife. You cant buy it you cant sell it you cant short theres no way to value it. Why not, if youre going to go into the market, boy a stock like apple which is not that expensive, or buy facebook. Awfully close to the highest close of the year right now. But its inexpensive. People are selling more of zillow than buying on this deal to acquire trulia,. 444 shares of Dylan Ratigan for each share of trulia, 3. 5 billion, all paper. Trulia shareholders participate fully in the combined company. I think its important to point out reminds me of jds and sdli. You went there. You went there. I was trying to figure out see if youre going there. A little bit. Just a little. Whats on mad money tonight . Remember it turned into just dont sue us. Epr, why am i focussing . People want yield. 6 yield a reit. Sit down with people not 25, sit down with older core, give me yield. Im examining companies that have good yield, epr is one, find out if its a bankable yield. See you tonight, 6 00 p. M. Eastern. Simon hobbs, whats coming up on the 10 00. The clash between social media car sharing sites and old city rule as head of the taxi and limousine commissioner will join us live, more of the interview on the ceo of blackberry and the biggest earnings, a whole new week on cnbc. We never thought wed be farming wind out here. Its not just building jobs here, its helping our community. Siemens location here has just received a major order of wind turbines. It puts a huge smile on my face. Cause im like, this is what we do. the fact that iowa is leading the way in wind energy, im so proud, like, its just amazing. Here at fidelity, we give you the most Free Research reports, customizable charts, powerful screening tools, and guaranteed 1second trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of Fidelity Investments, and low fees and commissions are another reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Welcome back to squawk on the street. We are seconds away from pending home sales for june. We are expecting a down number and a down number is what we received. Were looking at pending home sales down a1. 1 . We were looking for up half a a percent, yearoveryear i was paying close attention to. Looking for that to actually come down, maybe 5 lower, its down 4. 5. In a way we did better on the yearoveryear. But the month over month on the weak side. Last month up 6. 1 were holding. Revised up 6 . Last month up 6 , we gave back 1. 1 of that. If you look at two months together, maybe thats more appropriate fashion, of course, everybodys very much concentrating on housing, especially week of the Federal Reserve meeting. So much more, Rick Santelli, thank you so much. U. S. Stocks are lower, marginally across the board. Wall street watching the fed meeting rick mentioned later this week. Also numbers on gdp and plenty of earnings to digest. Jim paulson, chief investment strategist with Wells Capital management. Any reason to think this pause, which were seeing in equities from the record run, is going to turn into anything meaningful after what we have seen this slow and steady remarkable rally of 2014 . Yeah, i think i do im kind of in that correction camp in the second half sometime, sara but i dont think this is. I kind of think were are going to have to go break through 2000, maybe get less methodical here. This still seems methodical, little up, little down but going higher. I think well break 2000. I think we need rate pressure, break the twoyear above 50 basis points and ten year up to three. Probably going to take a hot wage number, hot inflation number, to get people worried about the fed moving up there exit strategy. And i cant say we have a lot of that yet. I still think were going a little higher but i think were close to the highs for the year. The underpinnings are in place. Jim, we mentioned cal lift this week, so many of them. What are you looking for to set the tone for the market in the short term . Jobs on friday, gdp on wednesday, the Federal Reserve, earnings and obviously allot of m a activity. Its a packed week. Not to mention the fed minutes. I think, sara, i think the gdp numbers going to be interesting because of that weird First Quarter number we had. If theres any revision there, also going to revise backwards a lot of the gdp numbers. Well get a new feel where were at. Thats going to be important. I also think that the jobs number on friday will be big, if we post another 250k job gain, thats the best sixmonth job gains of the entire recovery that were looking at. And then i think that wage number, the background, if that slips up to. 3 or. 4, that could get a lot of attention about where the feds at in this thing. Theres a lot of you might make a trade on positive vix this week, by the time we get done with it all. Jim, what does what is the correction youre anticipating look like . Goldman sachs on friday went to tactically neutral for the next three months on the stock market because they felt there would be a rapid selloff in bonds, rates rising and in that environment stocks would also sell off though still think that equities are best place to be. What is the correction that like to you, what precipitates it . Yeah, you know the biggest problem i have with this correction is i feel like im sitting with a big crowd waiting for it. Theres too many of us expecting one. So my point is, dont lose track of the fact that probably were multiyears away from the end of this economic recovery and bull run. You dont want to get so wrapped up in picking the 10 correction that you miss the next 50 run. So, i would approach it like this, i would i would stay overweight in equities because the longterm outlook looks good. Id start to diversify my equity overweight in many different ways. I think one way is move away from the Economic Cycle in the United States, which tends towards overheat here, i think, is the risk. And move to areas that dont have that. Move to japan, for example, in europe, a different part of the cycle. I would move to commoditybased economies like canada, australia, both of which outperforming the United States right now since yearend. If we get inflation fear here that will feed into the markets i think emerging markets have turned the corner, i think an overweight allocation as well. A lot of moneys gone into emerging market on the etfs recently. One final question, jim, if youre a bull of this market, you argue that the market can rise because the earnings will justify that. Why is it it that going through this earnings season, which actually has been i think im right in saying quite good for the companies that are reporting so far, the equity market actually has not risen during that period of time . Right. I differ a bit. I think the big catalyst, simon, in the bull run, in the last couple of years has been about revaluing the stock market for not the end of the world. I think think were valuing this at the end of 2012, 13 times earnings because we thought eurozone would blow apart or some calamity would occur. We had to revalue the market for sustainable recovery and thats what driven this, revaluation towards 18 times earnings. We need earnings from here, youll see a reconnection between the stock market and earnings going forward. I was going to say, jim, were now at sevenyear highs on valuations for the s p 500. How much left to go . Weve got to leave it there good to see you. Jim paulsen, says many more year left in the bull run, but perhaps a pause. Murmurings for sometime, Hedge Fund Managers invested in the dollar store related companies there would be consolidation in that area. The most often thought about union was between Dollar General as a buyer of Family Dollar. A company that has been struggling to a certain extent for a until of years, particularly when you look at its margins. Instead we weak up this morning to news that dollar tree is the buyer of Family Dollar in a deal worth well over at this point 8. 5 billion in cash and stock and a deal of course contributing to that significant rise in shares of the buyer, dollar tree, but down from its highs this morning, and Family Dollar as the acquired company here. As i said a deal thats the consideration 74. 50 a share, though thats moved up a bit with that move up in dollar tree shares. It does include a collar, meaning you get a certain ratio up to a certain point and then only get that ratio past that point. And lower end 49. 08. Talkings about 300 million in run rate synergies by year three and cash earnings per share, as you see at bottom, within one year. Yes, it is also a decent multiple, at least given the fact that Dollar General is not the buyer here. And the synergies being talked about are less than were at Dollar General. Remember, these are two companies that follow different strategy. Dollar tree, go in and everythings a dollar or less. Dollar general has a null of different price points. They cater to similar demographics but that being said, this is certainly something that is going to expand the multiple price point opportunity for dollar tree. The deal is done at 11. 3 times straling 12 months ebitda, thats a high multiple thinking Dollar General bought 11. 1 time back when it was taken private seven or eight years over eight year ago by kkr. That being said, multiples, i should say margins at Family Dollar are depressed. So there are those who say yes, its a high multiple but youre not talking about margins near what they could be for basis comparison, Dollar Generals margins almost 400 basis points higher than those at Family Dollar. As for dollar tree, you saw its stock up this morning. Investors rewarding it for a deal that will be accretive, that will add significant cost, saving tunes for the combined combination. 305 million termination fee. And youve got beneficiaries, such as trian, in Family Dollar for a long time, and carl icahn, got into the shares in april. That was after, im told, the initial inquiry was made by dollar tree about a potential deal. And after Family Dollar had already begun a process under which it was at least considering the idea of a sale. Why hasnt Dollar General chosen to play . I dont have all off the answers. It was aware certainly of the process, its unclear to me, based on my report, whether it was aware that a deal was so close. It also may have had a fair figured into the fact that the ceo is stepping down next may. Which many people said it wouldnt happen before then anyway, i guess dollar tree swooped in. It does appear they did something surprising, again, for a sector expecting consolidation but not that this would be the name doing the consolidating. David mentions the carl icahn has over 9 stake, 9. 4 stake, what he had to say at the cnbc Institution Investor conference a couple of week ago. I do believe theres great synergy between dollar tree Family Dollar, i think Family Dollars management is lacking. But its obviously somewhat disappointing that you have a very good ceo at Dollar General thats leaving, and that might throw a bit of a Monkey Wrench into a merger or takeover there. On the phone, chuck grom, managing director, what is the role of Dollar General now . Is Dollar General left out of freight because the ceos leaving . Is it in a sense in a transition phase . Could it come back to bid against dollar tree . You know, i dont i dont i dont foresee d. G. Coming in with a higher bid. I think they looked long and hard at Family Dollar late last year and their view was to grow organically and buy back stock and thats been their fiphilos y philosophy. I think with rick retiring, it seems to me that an acquisition would be more likely give than scenario. I think theyre going to go at it separately and obviously the dollar tree news today was a bit surprising for a lot of people. Right. What are you telling investors . What is the way to play the situation now . Well, you know, i think, i think the enand nair yo for Dollar Generals a little bit precarious considering theres a lot of investors that wanted d. G. To buy Family Dollar to help earning see correction after improvements in Sales Productivity at Dollar General. I think, you know, secondly, with d. G. Going at a stronger competitor going forward, least in theory, look back at past couple of years Family Dollar struggled significantly and thats been helpful for Dollar Generals earnings and comps. Going forward if Family Dollar can tighten the pricing structure of the model relative to d. G. It creates a modest backdrop. More competitive for Dollar General but im curious what it means for walmart. Take two together, 13,000 Stores Across almost all 50 states and canada, sales over 18 billion. This has to get walmarts attention, chuck. Yeah. You look at what walmarts done over the past couple of years theyve tried to roll out Smaller Stores with Neighborhood Market in express format. I think that theyre going to continue to test that express format and probably roll it out more aggressively in years to come. Its a vote of confidence that this smaller store format with the Dollar Stores as worked and i think its attracted a lot of interest. I expect walmart to you know get more aggressive over time. Could you imagine walmart bidding or trying to do some m a with the larger entity now . I think at some point maybe. But walmart historically has not been inquistive in the u. S. Would they like to buy Dollar General potentially . Would they look to counterbid against Family Dollar potentially . I dont think thats what walmarts best interest is, seems like to grow their Neighborhood Markets and express stores is their larger focus today. Good to talk to you, chuck, chuck grom. News involving that tanker filled with kurdish oil in the gulf. Michelle carusocabrera back at hq. The tanker likely to struggle to unload the Kurdish Crude Oil that is located in it. Talking about near the port of galveston, they have been trying to unload 1 Million Barrels of crude oil. Were in possession of a letter from lawyers hired by the Iraqi Government saying that, if Companies Help this tanker unload this oil, they will be in possession of stolen property. They dont say theyll be sued but it certainly reads like the companies will likely be sued. Weve spoken with one company, the lightering company, how you unload oil from a ship out at sea and bring to shore, its called lightering, literally make the ship lighter. Lightering companies have been warned, if they assist in the process, they will be in possession of stolen property. Remember, kurdistan is a region, semi autonomous in the northern part of iraq, it has its own oil. Trying to ship its own oil. The Iraqi Government in baghdad is against this, they say that all oil in iraq belongs to the iraqi people and should go through the Central Government of baghdad. The state department is on the side of baghdad but the kurds are trying to export their own oil. Theyd like their own money and perhaps one day, carl, their own country. Back to you. Youll keep on top of it, thank you. When we return, more of our interview was blackberry Ceo John Chen. Squawk on the street continues in a moment. K you for your sacrifice and thank you for your bravery. Thank you colonel. Thank you daddy. Military families are uniquely thankful for many things, the legacy of usaa Auto Insurance can be one of them. If youre a current or former military member or their family, get an Auto Insurance quote and see why 92 of our members plan to stay for life. Welcome back to squawk on the street. Zillow and trulia, two big movers in early trade, they are better together. The companies announcing this morning zillow will buy trulia for 3. 5 billion in stock, trulia shares surging, more than 8. 5 on the announcement. Zillow falling, down as much as 5. 5, now down 6 . The deal expected to close next year. Be sure to tune into squawk alley at 11 0 eastern eastern for an interview with Spencer Rascoff. Wonder what he thinks. Jon fortt joins us more with his interview with blackberry Ceo John Chen. Thank you. He talked about a lot of things but one of the things most interesting, postapple ibm partnership, who does blackberry want to partner with . I asked him specifically what characteristics hes looking for in an enterprise partner. We would love to have a broad sales channel. You have me pick, i will probably pick towards Application Solutions side. I think theres a, you know, behind the mdm are a huge market of security, obviously. Behind Security Market is a whole iot market, internet of things market. So if you have me choose, i would like to make sure we well positioned in the iot secure market and then the customer act quigs a act quigs, if you have good enough, they will sell. Especially with the Security Software itself. Who is this . Well, s. A. P. An obvious choice. He used to run a company that s. A. P. Acquired. Also cisco perhaps, security, its got iot as well. He wouldnt be more specific. Who are you talking to . Your guesses . These are my guesses. He wouldnt name any names. You know you dont want to say exactly who you want to take to the prom until you have a commitment. But thats what hes looking for. I think its interesting to watch blackberry shares, risen 50 this year, and apple, after that apple ibm announcement they tanged. This is not a Profitable Company yet. Well, hes recommitted to being cash flow break even by the end of the fiscal year and actually bring in some cash, cash flow positive in certain quarters next fiscal year. He reiterated that. This partnership, if ease able to make it big part of making that happen or accelerating it because he wont have to spend money on Enterprise Sales force, big forces of enterprise massing towards mobile. He needs a partner. Famous for saying 50 confident, 80 confident. New number . You didnt give me a new percentage. He did seem to be even more committed to focusing on enter price enterprise, even when it came to messaging, talk about bbm as an enterprise tool as opposed to consumer. For investors hoping for a big play in consumer, not so much. Okay. Thank you very much. Jon fortt with the latest from blackberry. Up next, jack lew speak out against tax inversions, this time in oped, saying Congress Needs to act now to crackdown. Well talk to a member of the House Budget Committee about that before the break. A look at the dow falling to onemonth low at the height of earnings season. Well be right back. In a world thats changing faster than ever, we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Hi can i help you . Im looking for a phone plan. It has to be a great one, and i dont compromise. Ok, how about 10 gigs of data to share, unlimited talk and text, and for a family of four, its 160 a month. Wow, sounds like a great deal. 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Jack lew penning this oped in the washington post, quote, moving tack home overseas the companies are making the decision to reduce their taxes, forcing greater share of the responsibility of maintaining core public functions on Small Businesses and hardworking americans. Joining us respond, House Budget Committee member and indiana republican, luke messer. Thanks for joining us. Thanks for having me. The white house has been very vocal, we heard from the treasury secretary delivering alpha, hes penning this oped, the president speaking to us last week, what is the republican response . Is there a unified way that the republicans have to deal with thoois these Corporate Tax inversions . No ones going to defend the Corporate Tax loophole. We need to eliminate incentive to do this, lower americas Corporate Tax rate, making it competitive with the rest of the world. Thats the real answer, not throwing stones at American Business. But that could take a while. Clearly, things arent moving very fast on capitol hill. You know that. Theres great division. The Corporate Tax, its an ambitious thing to tackle. Why not put an end to the loophole, as you say, if youre against it maybe not retractively as the president suggests but do something about it more imminently. A compromise that might be able to get done. One, change the loophole, two, allow the repatriation of dollars earned overseas, allow American Companies to bring that back and invest those dollars in america without a tax penalty. A deal that put those two together would make a big difference for our economy and deal with real challenges. What we need is a president thats going to lead make clear americas Corporate Tax rate will be competitive with the rest of the world. I dont think we should wait for the open of individual tax reform before we make that tax law change. On the repatriation idea, you know, many corporations keep huge amounts of cash overseas for the very reason many say theyre waiting for that holiday that may come. But look back when it was done a number of years ago, it did not produce, certainly on the jobs front hopes that might have been expected. Ended up being more return of capital to shareholders and didnt do a lot to product the economy. What youre talking about a temporary change. I would like to see one thats permits im can tell you, as i talk to business leaders, theyre excited about the opportunity to bring manufacturing back to america, and i believe if we had those dollars, we had the ability for companies to bring dollars back in america, have them invested here, you would have the opportunity with some of the nearterm advantages weve had, with our improvements and our competitiveness of our energy infrastructure, that we could create jobs if we allowed those dollars to come back. Congressman, when you call for better leadership from the president , are you prepared to follow . When he did an interview with our network last week esuggested there should be a piece of legislation, the foreign requirement of ownership should rise from 20 tof shares outstanding to 2050 and asked that congress put that through. If the president asks you to do that, why would you not put that through . Why do you to link it to other things that are unpalatable . This tax reeve knew will be lost forever. As companies invert, they will never come back into the american tax domicile. The implicit belief in a modern economy we could somehow hole American Businesses hostage, thats not a longterm answer. What weve got to do is structure policies that deal with the fact that americas Corporate Tax rate is not competent fiv in tive in the global economy. We ought to lower the tax rate to businesses can thrive and survive in america and somehow trying to throw bars up, Companies Pay a lot of smart lawyers and regulators, theyll find another loophole if you close this one. Its not effective Corporate Tax rate. The effective Corporate Tax rate across this countries competitive. What they pay is actually competitive. Its the fact wherever they earn dollars around the world, theyre taxed. Thats the issue. But its also true for personal taxation, wherever an american works around the world, they also have to pay tax back to the irs here in the United States. Are you prepared to do this on behalf of individuals as well . Oh, sure. I think we should do both. We shouldnt penalize folks that earn money overseas. We ought to encourage them to invest dollars in america, not penalizing them for doing it. Any legislation you would sign on to, proposed by the democrats to try to limit inversions without talking about a Corporate Tax holiday . Id have to see the legislation. I mean, nobodys defending this loophole. Its not good for america. Many of the companies that are involved in it you hear them say, they la men the fact that they are being that theyre put in this situation. Theyd like americas Corporate Tax rate to be competitive. My question is, though, whats right way to approach the issue in somehow try to lock American Companies here and force them to not be able to have a flexibility they need to be profferable, or do the right thing, drop the Corporate Tax rate for every American Business and make a big difference for the economy. The two sides are so far apart, they agree its a loophole and should be stopped. I mean, the a disappointing situation. We have a president who leads to make america to be more competitive. Congressman luke messer, republican from indiana, responding to jack lew and the president on inversions. Straight ahead, social and internet stocks seeing big moves over the last week except for twitter. That might change, of course, reporting Second Quarter results tomorrow. Well talk to rich greenfield where the stocks are headed after the break. During the cadillac summers best event, lease this all new 2014 cts for around 459 a month or purchase with 0 apr and make this the summer of style. In todays market, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price, maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of Fidelity Investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Call or click to open your fidelity account today. Thats why i always choose the fastest intern. R slow. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. Economy, gdp, jobs number and a fed decision coming in the next few days. Steve liesman is here with what we can expect. Steve, you tweeted, could be a test of our policies this week. I think thats right. And thats the risk for investors, whether the Economic Data comes in, with the feds expectations presenting yellen, fed chair janet yellen, with the first test of her tenure. The fed indicated easy Monetary Policy well into next year. A small group of critics arguing the feds behind the curve. Strong growth and inflation data would raise volume of the cr critical refrain. Richard fisher says, ive grown concerned about the risks posed by current monetary poll circumstance the fed is at risk of overstaying its welcome, inflation and asset bubbles, hes at odds with his colleagues. That may telegraph a dissent this week in the fomc, but perhaps joined by charles plosser. We had home sales this week that came out earlier today, lower than expected. The caseshiller home price index and Consumer Confidence tomorrow, followed by it starts to accelerate adp up, gdp up 3 , reversing the First Quarter weakness. Id be watching prices and wages, two indicators whether or not the fed has to move faster. Most likely the fed takes 10 billion off what had been 80 in purchases in december, down to 25 billion now. Publicly, not much change expected, only a slight tweak to language, take note of the improving job scenario but a serious behind the scenes discussion about the accelerating pace of tapering and moving up the timetable for hiking Interest Rates. Heres how the fed might look at date tap this is what happens this is now threemonth average and compared to september. Job growth quite a bit stronger. Unemployment rate, lower. But on the backs of a big decline in the participation rate. Earnings stronger and inflation, pretty much unchanged though its up from where it was a few months ago, 1. 1 . Yellen, in my opinion, not prepared to pull back on the throttle at a faster rate or accelerated expectations for rates with the big negative in the First Quarter and housing data mixed. Pressure is building, some centrists indicating a willingness to raise rates sooner if data improves weep might be coming to the first test what yellen believes personally versus what she has to do to control the committee. Love your take on the mom and pop stories, raises in style, wages in specific industries. Is that a reach . I dont think so. Weve seen some increases, the Nfib Small Business report, carl, talked about people paying more, businesses paying more to get qualified personnel in the right industries. There are raises out there, some of the better paying industries have had more job acceleration or growth right there its not widespread but thats one of the things the feds watching and one of the places where policy and the data could be at odds. Big week for us all, steve. Steve liesman, back at hq. Its a roller coaster ride for online media stocks, pandora, twitter stumbled over the last month. But facebook and linked in have seen great gains. Gear up for twitter earnings tomorrow. How should investors play the group . Rich greenfield, welcome back. Thanks for having me. Facebook, last week, bolted higher 10 higher on its results. Should people buy twitter in anticipation the same could happen tomorrow . I think people should continue to exercise caution on twitter. Twitter is having significance user issues. Twitter is driving revenue. Seeing a lot of companies trying to figure out how they reach consumers on mobile devices. The reality is, tv advertising is weak, despite overall robust advertising market. I think clearly theres a good chung of that which is advertisers are want more flexibility, an to attack online. Obviously google and facebook are the default goto places. We love facebook, we raise our numbers heading into earnings last week and raised our target. This is still a stock your views should be buying. An attractive stock here that were telling clients to own. I think on the twitter side its harder. They are improving monetization, the challenge is users, users are still far smaller and growing pretty slowly, relative to what were seeing at facebook. Thats the challenge, how big can twitter be . And how do they convince not me, i love twitter, im on it all the time, i love using it, but the problem is, how do you convince your mom, how do you convince your friends they have to be on twitter, the way theyre on instagram or facebook . Let me come back i know that you think youre calling Facebook Stock 5 higher from where we are. Its been such a phenomenal performer, over the year its more than doubled. Its 120, 121 . Its now 195 billion company in market cap, its about a third 0 the value of apple. Can facebook keep growing in mark cap . Can that continue to rise . Well, lets put it to you this way, if you want to think of it in the context of how big facebook has gotten. In the last quarter facebooks advertising revenue, so in just the last quarter, facebooks advertising reb knew this is a worldwide number though the vast majority is in the u. S. And europe but that number, that advertising number, is bigger than if you added together time warner, so twx, as well as viacom, viab, put their two advertising numbers for the prior quarter together and its a smaller than what facebook reported in one quarter. The numbers are at such a scale and theyre growing at 60 plus, and that will slow, but the growth rate on large numbers is just staggering for facebook right now. Rich you, know i wonder, sometimes somethings right in front of our face, we may not recognize. You follow some of the old i hate to use that word the other Media Companies. Traditional. Thank you. You cited remarkable statistics. Its not a zerosum game but the moneys coming out of their budgets, isnt it . Should investors look at those and wonder about potential advertising growth rates for networks watching ratings fall. We downgraded discovery as well as viacom a few weeks ago. Part of the thesis was the ad market for tv is sluggish. And advertisers are looking elsewhe elsewhere. Not only was broadcast down, having a weak upfront is not surprising in the trends in broadcast tv but the cable up front was soft. What youre seeing is advertisers are migrating. They know youre sitting in front of the television, staring down or kids are staring down looking at their devices. Even if theyre not fast forwarding through commercials, theyre not engaged with commercials. Theyre obsessing with applications and thats why advertisers are looking at Something Like facebook or google, and thats where theyre gravitating towards. That said, that said, rich, you like i think fox and disney. I do. Two preferred stock. All that said you know what stands out in those two . Think about disney, heavy in sports, so espn, something you watch live, youre not exactly staring down at your device during the middle of the world cup, youre watching. And i think when you think about monday night football and the power of what espn has, and think about the disney channel, no advertising. So, disneys a company that is not heavily advertising exposed, and the ads they do have are muchwatched live. Fox, lots of sports. Look what theyre trying to do with time warner acquisition, trying to buy heavily into content, actually own content like hbo, with no commercials or warner bros. , television, warner bros. Film, they want away from re re reliance on tv broadcast business. Rich greenfield joining us from btig. New york city tackies arent just competing with uber. Now lyft to worry about. The new competition, what it means for its business, coming up next. Squawk on the street will be right back. In new york state, were changing the way we do business, with startup ny. Weve created tax free zones throughout the state. And startup ny companies will be investing hundreds of millions of dollars in jobs and infrastructure. 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If youre a current or former military member or their family, get an Auto Insurance quote and see why 92 of our members plan to stay for life. You might remember the failed launch attempt a few weeks ago, the ride sharing app delayed for failing to meet new york citys taxi regulations. This past friday lyft got the green light to offer its Ride Sharing Service in the big apple, this time without the sharing. Joining us at post nine, meera joshi, ceo of new york citys taxi and limousine commission. They wanted the market to bend the Business Model this way what happen was the fix . What makes them legal . Absolutely, they wanted this market. Who wouldnt want to be in new york city . The fix for them, they had to get tlc licensed drivers to do the Transportation Service that they offer. And they went about that by buying a base and now they can only use tlc licensed drivers and tlc licensed vehicles. We said sharing is not part of the deal. Is there no way sharing is allowed . What do you make of some petitions that had 10,000 signatures wanting people or companies to bring sharing to the city . Its funny. They say they want the peer to peer model in new york but its ironic the number of aspects of their model that are already here in new york. So one of the aspects is drivers can work part time, its flexible, in a peer to peer model. You can do that in new york. Theres no set number of hours that a tlc licensed driver has to operate. Close to 5,000 up front, doesnt it . To get the license. Kind of knocks out the teacher, the fireman, the single parent that wanted to do the traditional model for this app. Not really. We have a number of teachers that are tlc licensed drivers that but spend 5,000. My question is whether you feel that the regulations that you have at the moment are keeping up with the sort of innovation that we have in the space and whether that operating in the interest of the people of new york at this stage. Absolutely. The regulations we have are at the core to protect the passengers, the people of new york city, to make sure that the vehicles are in good shape, they pass 200point inspect, and carry the right insurance so if theres an accident the people in the vehicle get compensation. Without the right insurance, under the model that lyft was proposing, if there was an accident, people would be completely unprotected. The elephant in the room is the fact that you have the yellow cabs, the medallions trade agent almost 1 million each and highly lit tidge gus. Im assuming youre forced into the corner by lobby which the last mayor vowed to rip apart as soon as he came out of power. Absolutely. I dont think were forced into this at all. Were simply upholding the tenets that apply to the entire fhv industry and the entire industry as a whole. There are things that drivers need to do to qualify to move people around in new york city. We move a lot of people around, besides the subway and buses, 400 transportation, the third way to get around new york city with 1 million trips a day. We have a responsibility to the public to make sure that were upholding standards so that transportation is safe. When people come in and offer a new Business Model that degrades those standards we have a Public Policy reason to make sure we dont allow that to happen. How difficult for lyft to change this . Theyre in the door, in the market, built the relationship with you, if they try to change it, because its expensive and goes against their model, could they do that . They can always come to us with suggestions, pilot projects, suggestions for changing rules, and were always open to new ideas. We will maintain what weve maintained from the beginning, we cant degrade our standard. But anything that improves the ability for all licensees to make money and get operating in new york city would be an improvement that we would welcome. Ubers marketing the idea theyre cheaper than a yellow cab. Is that technically true . Well, its difficult to determine because ubers rates depend what day it is, what the weathers like. So at least in the yellow cab you know what you get, its the metered rate at all times. If you want to say on average, you might have a different calculation than comparing a single uber ride to a single cab ride. Great have you back. Thanks for stopping by. Meera joshi, chair and ceo of nycs tlc. Ahead, zillow ceo Spencer Rascoff will join squawk alley live for a first on cnbc interview, that of course following his announcement that theyre buying trulia. You dont want to miss that. Well be back after a quick break. Did someone say burn . Try alka seltzer reliefchews. They work just as fast and taste better than tums smoothies assorted fruit. Mmm. Amazing. Yeah, i get that a lot. Alka seltzer heartburn reliefchews. Enjoy the relief. 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Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Make the most of every moment. Ask your dermatologist about humira, today. Clearer skin is possible. Thats why i always choose the fastest intern. R slow. The fastest printer. The fastest lunch. Turkey club. The fastest pencil sharpener. The fastest elevator. The fastest speed dial. The Fastest Office plant. So why wouldnt i choose the fastest wifi . I would. Switch to comcast Business Internet and get the fastest wifi included. Comcast business. Built for business. Now over to Rick Santelli in chicago. Youve got a full plate this week, rick. Reporter darn right, we have a full plate. We love it that way. Speaking of full plate, were going to start out the meal talking to somebody who understands a good cook for data, peter bookfar. Thanks for taking the time this morning, peter. Thank you. Reporter is the fed missing a great opportunity . When i look overseas and see spanish tenyear yields where they are in deference to 2. 5 , i see boon yields at 113. The notion when we have a tailwind of global low Interest Rates, wouldnt this help the fed kind of get in front of the curve a bit by using those forces to their advantage . I agree. The data itself should be the impetus for the fed to move. The data is moving much faster than the fed is forecasting. We could hit their yearend 2015 forecast on inflation and the pce just within the next three to six months. So the fed is falling way behind the reality of the data. And overseas rates, as you mentioned. Reporter do you watch the yield curve spretds . Yeah. Reporter id like to watch the 5s, the 30s. The 30s has really been in a hyperflattening mode. That spread now is about 155 base points. Its down another eight in about a week or so. What do you think that spreads telling us . Well, its interesting. We saw the exact behavior in the yield curve after qe1 and qe2. There was a flattening. I think theres a couple messages. Number one, the longer end is rallying because its focused on very mediocre global growth. And then you can throw in geopolitics and then you can throw in some flow, whether its chinese buying or pension fund buying, whatever. But the short end, even going as short as the twoyear, i think, is beginning to price in a fed thats going to have to be forced to raise rates sooner than they anticipate. Therefore, something Fourth Quarter this year, First Quarter next year as opposed to the mid2015 or late 2015 that many Market Participants outside of the bond market expect. Reporter you know, peter, when i look at what Interest Rates are and then i look at some of the data of late in housing, whether it was the big miss last week on new homes or today on pending home sales, has the fed, in many of the academics that help evolve monetary and fiscal policy, do they put too much weight on low Interest Rates, isnt it an affordability issue, the availability of credit issue . It isnt necessarily where Interest Rates are, especially the big rates that we all follow. It is intertwined. One of the biggest buyers of existing homes over the past couple years has been that private equity buyer. Well, what has pushed the private equity buyer to buy those homes was a search for yield. Well, that search for yield is driven by artificially low Interest Rates. So the feds desire to help the Housing Market basically caused these doubledigits price gains that is now priced out of the market to the firsttime homebuyer. Thats why counterintuitively, we need lower prices. We need a much slower rate of gain in house prices to actually help the Housing Market to bring back that firsttime homebuyer. Reporter excellent. Peter, its always a pleasure talking to you. Thanks for coming on this monday morning. Simon hobbs, back to you, buddy. Thank you very much, Rick Santelli. Were counting down to the launch, of course, of squawk alley. Kayla tausche has more. Morning, kayla. Reporter good morning to you, simon. Trulia, zillow, the big deal of the morning. We will talk to Spencer Rascoff, the ceo of zillow, behind the deal and that very rich valuation. Because is the ceo of blackberry considering a deal . Our jon fortt spoke with him. Well have more on that and the apple ibm partnership. And finally, a rare interview with hollywood producer thomas tully, the ceo of legendary pictures, the man behind the dark knight franchise. You dont want to miss that either and all of that and more is ahead on squawk alley coming up next. Just take a closer look. It works how you want to work. With a Fidelity Investment professional. Or managing your investments on your own. Helping you find new ways to plan for retirement. And save on taxes where you can. So you can invest in the life that you want today. Tap into the full power of your fidelity greenline. Call or come in today for a free oneonone review. In a we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Good morning. It is 8 00 a. M. At zillow headquarters in seattle, 11 00 a. M. On the east coast, and squawk alley is live. And welcome to squawk alley. Joining us, jon steinberg, ceo of daily mail north america, jon fortt, Kayla Tausche here. A busy week for tech as the dow is down about 54 points. First up this morning, the man of the morning. Shares of the online Real Estate Firm trulia jumping more than 10 today after news that zillow has agreed to acquire the company for 3. 5 billion and a stockforstock transactions. Both Companies Say the deal expected to close in 2015. Spencer rascoff is the ceo of zillow. Spencer, great to see you. Congratulations. Good morning. Thank you very much. Thanks for having me. Good morning. Obviously, this was not the bestkept secret of the past 72 hours or so. How far back does this adventure begin . Well, the adventure begins for real eight or nine years ago because our