Things. Week to date they are fine. 0. 4 is the loss for the week i think. Crude oil, there it is. Right around that 57 level. The tenyear note yield, down from recent highs. Our road map starts with deals. Avago buying broadcom. Mixed Quarterly Results and outlook from costco and abercrombie and fitch. Amazon announcing free sameday delivery for some prime members if your order is large enough. Its not free. Lets start off with a large deal. Avago agreed to buy broadcom. The deal expected to close in the First Quarter of the 2016 calendar year. After that happens, the combined company will take on the name broadcom. And be led by avago ceo. He is too busy to join us this morning. He is very aggressive apparently. Dont know him. If you could get nick on. Have i met him . No. Hes one of the few i have not met in this group. I met pretty much everybody else. Youve been talking about broadcom for quite some time. I can tell you 18 months ago they talked to intel. Last october they talked to avago. They come back with a 70 move in their stock price up. It makes it easier to get a deal done. Whats interesting apart from the deal itself its another company with a low tax rate singapore tax rate a high amount of leverage. They did lsi, they are doing this deal. They are not about merges of equals. When you look at the respective size, they should have been an moe. No. They are borrowing to do it. They get rewarded for it. That is the way things are working in this market. Until it doesnt work. Avago is a combination of activists and valeant. No. This is an amazing deal. If you rip up the Samsung Galaxy s6 and apple iphone 6 and apple watch, you see why you have to do this deal. Avago, big part of the apple phone. Apple never confirmed. Broadcom big part of the phone. These guys have been duking it out. This is the rollup versus david aldridge. David aldridge . Skyworks. He said you should buy my stock. Thats number one. They are going up against sky works to get as much business from apple. If you look up the galaxy s6, samsung has been increasingly taking over its own parts manufacturer. Avago and broadcom are there. Thats important. If they are written out, you are not going to raise numbers, you are going to lower numbers. This is brilliant to deal with apple, samsung and sky works. Shareholders will hold a good percentage. Its as much as 30 . It will be 50 50 cash and stock. Shareholders have the opportunity to elect restricted shares. That is for tax purposes. The shares you receive under the regular shares would not necessarily be taxfree. We saw it in burger king but youve got to hold these restricted shares as much as two years. That may appeal to the founders who control as much as 50 of the country. Henry nicholas owns as much as 25 . He is a brilliant man. Those of us who go back far enough, it was a great idea because it would have put intel into cell phones. Intel is still trying to play catch up when they broke up. It had a division losing money. If you look at broadcom we have the 3 and 4 in term of 3g and 4g. Broadcom has 5 set to go and 6g. They are the most forwardlooking companies. A lot of this is driven by video. I had idt on last night. They are the charging station. The Wireless Charging station. They are in the apple watch. Thats another player that hit a 52week high yesterday. Everybody who is in apple, we had a lot of notes about china and apple sales. You must be in apple. You cant talk about apple. The whole charging business whether it be buying an ikea lamp, the starbucks charging station, how are you doing with apple . Cant mention apple. In this case it does appear you wont get a deal done unless the two founders go along. The cost in scale is going up. These are cashintensive businesses. Scale becomes more important. We are start seeing more consolidation. Dont have anything on intel and altera at this point. No stranger to our viewers there have been talks there. We know that. Well see how this goes. The wall street journal breaking the story about the talks. Didnt have any deal points in terms of price. You said the stock moved to much. Moved up 22 in the regular session. They are selling at a multiple of at least 13 times. Thats a high multiple. They are getting a premium to their tenyear high. They seem pleased to do that. Given the stock component, there is an opportunity for their shareholders to benefit from accretion which is going to be significant here. This is the story of our market right now. When you sit down with aldridge, the ceo of sky works, which is the primary company taking intellectual property away. He told me apple not apple, the cell phone makers want one player. They want one chip. You cant have an avago chip and also have a broadcom chip if sky works comes up with a onechip solution. If you merge those two companies and you go to apple and say weve got the chip that combines it, that can make the smaller form factor apple needs to put more info in tight. This is survival of the fittest. You merge for apple or die. Merge or die. Its like beaugest. You have to play zidero pfrn tfrntzideropt. You have to play with apple. They wont let people name their stuff, but there it is. Its broadcom avago, sky works. The holy grail. All right. Lets go from that to carl with more on different parts of the Technology Seen out there. Weve got the google developer conference today. The second and final day of the code conference here. This is when the headlines start to pop. You might notice gopro at the bottom of your screen. Thats going to move in the premarket. Nick woodman sat down with Karen Swisher last night and addressed longstanding rumors suggestions, ideas that gopro would launch a drone. Drones. Are you quad something or other . So you guys all want gopro to make a quad copter . Do you want gopro to make a quad cooperator . Okay. Gopro is making a quad copter. Its official. You may think im joking. We thought it would be terrific here on recode to drop the news. I know. I just dragged that out of you. Going to come out in the first half of next year. No comment on the cost. Woodman said it would be a consumer product. He talked at length about the future of gopro being not just about the cameras themselves or the mounts but this sort of seamless suite of products that would allow to you shoot your video, download your video, sync your video seamlessly without having to touch an sd card. Gopro up about 5 . Thinking back to the last quarter when earnings were ahead, heaven ewe was ahead, asps were ahead, they guided ahead. Seemed the International Story was kicking in, as well. What is amazing, the only stock that goes up with this is ambarelo with the works inside gopro. It peaked a christmas ago when insider sellers came in. People have gopro on wii meaning its already everywhere. What are you hearing about china . The chinese need the gopro. Do they talk about that at all . The International Story was one of the pluses of the last quarter. If you are a bear and you argue gopro is a camera on a stick company, that will lean toward china strengths. I want to get to apple. You talked about the watch and avago and broadcom. Jeff williams is head of operations for apple. Powerful executive at that company. They tried to pin him down on some specifics. At least asked him why apple has been so stingy with metrics when it comes to the watch. We decided to do that right out of the i mean at the very beginning we decided we werent going to release data on the watch. We released maybe too much data today. We didnt want to do that. Wait. Lets go back. Youre not secretive enough today . I think we spend too much time thinking about the numbers and spending time on that. We would rather spend time making great product. One anecdote how powerful apple is. Les moonves spoke yesterday at the code conference. Karen swisher asked him, are you going to do a deal with apple tv . Moonves said probably. Karen said whats it going to take and moonves said money, to the laughter in the room. Thats how it takes shape with apple. Thats fascinating. People know how powerful it is. Ive been ordering apple watches to get a sense of the demand. I ordered one literally 30 days. It came yesterday. You can say thats because of manufacturing inefficiencies. Im hearing mixed reviews by some people that some people adopted it some people tried it and they like their fitbit and current devices. What are you hearing about the zeitgeist of the watch . Mixed. The biggest complaints tend to be about the Third Party Apps which usually need a little bit longer lead time to get used to the platform. They tend to be slower. I think my watch is here. My phone is here. Its going to be easy if im pulling up on my watch to use my phone and take advantage of the larger real estate. The argument would be its early days. You could read the thinness of the metrics from apple as a sign they want to give it time to bake in the oven and get these watches on the wrist to more americans. I think that is a great point. Ive been trying hard to get more information about it. This is for the under 25 set. There are people who have watches. I tried to go to apple, get information about the fact that yesterday on the Conference Call from courseres, which was a disaster not talking about coors the beer but kors the handbag company. Watches are terrible for them. I dont want to jump to the conclusion its about apple. Apple is kremlinlike circa 1972. Right. Got it. Brezhnev. They started to all disappear. Well check in with you throughout the morning. Coming up on squawk alley as well. Carl out there. That conference has news left and right. Amazon upping the ante in the online delivery wars. Another look at futures. We are 15 minutes away from the opening trading for this thursday morning. More squawk on the street live post nine when we return. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Female announcer through sunday its posturepedic vs. Beautyrest with up to 400 off. Serta icomfort and tempurpedic go headtohead with three years interestfree financing. Mattress price wars ends sunday at sleep train. Your ticket to a better nights sleep expected quarterly earnings. Comp store sales fell 1 with lower gasoline prices and stronger dollar. Amazon announcing its making same day delivery free for alreadypaying prime members provided their order size is at least 35. You are paying 99 a year for prime but also getting the Video Service is less than what youre paying for hbo. Even one or two shows youre ahead of the game. When you talk about these mergers, you are talking about Amazon Amazon and streaming. Lets go back to costco. Up as much as its down. Up yesterday. I think you are not getting the big upside because people think costco is an american company. They have 673 warehouses. Only 474 in the u. S. 89 in canada. 35 in mexico. They wanted to be big in mexico. You have a dollar issue here. You see plus one on the comps or minus 6 and thats how you get that number. You get a blend of those. International kept it down. Because of currencies. We havent talked japan yet. They have 20 in japan. You see what theyve done with the yen . At one point that would have been the biggest story on a sleepy thursday. It is a big story and we havent talked enough about it. Our colleague sara eisen would prefer we talked about it. We have to wait until the eisenhour. We dont think there is an asset bubble or stock market bubble but we will continue to monitor carefully. I think the Exchange Rate included in the yen should move inline with economic fundamentals. You have that. Up next the mad dash from mr. Cramer. Counting down to the opening bell. Give you one more look at futures. Here at td ameritrade, they love innovating. And apparently, they also love stickers. Whats up with these things, victor . We decided to give ourselves stickers for each feature we release. We read about 10,000 suggestions a week to create features that as traders wed want to use, like social signals, a tool that uses social media to help with research. 10,000 suggestions. Who reads all those . He does. For all the confidence you need. 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Talking about western digital. There used to be multiple players. They all merged. Pcs slowed down. Goldman takes them to a buy. These stocks are going to fly. One because they are heavily shorted. Goldman saying they are too cheap. They could be leveraged buyouts. Those remembering steve russo telling people in 2000 are you kidding me my stock is too cheap . Then he bought it. Buybacks are a tough thing to occur after dell. Boards look askance at it. Shareholders not happy about it. If your ceo wants to take your company private, you have a rough go of it with your board. Thats important. When they are earnings alone, i dont want to buy the company. You are not seeing a lot of bump there. Maybe engo will buy them. Not teva . They dont care what it is. Theyll get bigger. Sure why not. Cheap stocks oh my god, david, look at this. You know what that is . Roller coaster . No. Its head and shoulders. Weve got the opening bell about five minutes away. More squawk on the street coming up. 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Margin requirements starting to have been raised and that seems to have an impact. That market has been on fire. Yeah. I was thinking if i ran Goldman Sachs i would immediately change it to goldman shanghai. They are opening a million accounts every day there. Thats whats happened this year. They let the individuals in. Theyre a little unsophisticated from my take in they buy, buy, buy. That is about new account creation. Ive never seen anything like it. I remember pointing out in the early days. People would go onto stock parlors almost like watching a horse race. There was no investing. Chinese city name dropper. Yes. Thats me. Chinese city name dropping. Its true. I can play that. Does anyone know the top 30 cities you can beat me at most games having to do with anything to recall. Why isnt the nfl there . In china . Yeah. Really . What happened to them in soccer . Not yet. There it is. Opening bell. We see the realtime exchange back at headquarters. Composing itself into what will be more red on the board than green. Life science ess agilent technologies. Agilent has been an earnings disappointment. This is from hewlettpackard. They do not get saluted enough for the great legacy and Great Charity works. Overstock. Com at the nasdaq joined by members of the Wounded Warrior program. Very nice. Avago has gone from 140 to 40 since a year and a half ago. Its up today. I just think about apple. We dont talk about the notion that the apple iphone controls a lot of the mind share. We went to seagate and western digital. That is the key here . They do things other than just provide chips to apple. When you buy a company and your stock goes up that makes you want to buy another company. Yeah. Fred saunders activist. Citi. You see the golden rule buy list theyve got there . Not making fun of it but they added sorry, added the focus list. New drug came out. When you add a drug to the focus list like they did with actavis, that stock goes up. Saunders uses the jpm upgrade and goes and buys another company. Listen i dont doubt it. Theyve got a little digestion to come with allergan. They have a drug for that, in digestion. Now, david, pfizer is often talked about but left at the altar. Yes. Old Line Companies that are unfortunately located in places like new jersey cant do some of these deals. Pfizer is in midtown. I know. But im saying bristolmeyers is in my home state of new jersey. Its a good point, jim. Back to avago. Low tax rate. Accretive deals. All deals are accretive. In this case to be fair, they are using stock. Will still be quite accretive. Borrowing rates, borrowing 15 billion in banks. No bonds, Straight Bank debt. Its an interesting time. They keep getting rewarded in the stock market. Actavis, valeant, avago. I had integrated devices on. Tremendous company. Charging stations. That is something im sure apple would like merged with avago. Idti wants to stay independent, they are a great company. When you tear down these products, you see too many companies. Xpi is in all these. Notice there are articles about apple in car play. And lamented General Motors going from sell to hold but keeping their 28 price target. You want to talk palo alto. Do i ever. Thank you very much. Youre welcome. When we looked at workday the other day, another highly valued stock, they did not have the growth palo alto. 55 revenue growth. 8 link quarter this is amazing. Gross margins up 140. This is the hot Cyber Security company. Nothing is hotter than Cyber Security. Cyber arc, very aggressive company. They do the keys to the kingdom. Fire eye does the after youve been hacked you get called in. They are all about prevention. Taking a lot of share from legacy. I think legacy means acceptsemtech but it could mean anybody. But palo alto is the choice. At any Investment Conference you are obligated to have two panels, one on Cyber Security. You must have it. When it involves ceos. And activism. Those are the two musthaves. Everybody wants to talk about Cyber Security and activism. Jamie dimon talked about activism yesterday related specifically to the proxy Advisory Firms. Something we talked a great deal about. These firms such as iss that tell the index funds or advise them how to vote in a given proxy battle. And many other issues including pay and other things. God knows how any of you can place your vote based on iss or glass lewis. If you do that you probably arent good investor. Believe me. I know some of you here do it because you are lazy. He is talking about outsourcing. These index funds operate on the idea we want to charge you the lowest amount of fees. That said it is important. I agree with mr. Dimon. They are shareholders. Some want to call them accidental shareholders. Dupont is an example. The vote turned on the votes of the three big indexes. Vanguard blackrock, i forget the other one. If any one of them had gone the other way, nelson peltz would have gone on the board. If they had gone the way iss recommended, and some of the others, it would have been different. They went against the proxy Advisory Firms and went in favor of dupont. That is a very important, perhaps seminole event how these votes go. Its interesting mr. Dimon is following with the comments he made about, come on guys youre shareholders. Do what you should do. Im going to agree with you. I thought it was terrific. The outsourcing to companies that dont do some people would say as much homework as you think. Also the fee structures they get paid by hedge funds for their reports. So the question is whose side are you on . How likely are you to go . Management spends an enormous time with these proxy fights with iss. 40 of the time could be meeting with them talking to them trying to win their approval. That is something that doesnt get back in. Thats why we talk about activism very distracting for management. How much business can you do when youre spending all your time with those guys . Andrew liveress who had an acrimonious fight had to spend a huge amount of time to work on the proxy. Was glad to put it behind him to focus on business again. Im sure ms. Coleman feels the same way. The tide may be turning. Dupont was important. You are getting the daily rumors where nelson peltz will strike next. Today its johnson controls. The other day we heard it was emerson. Eaton which my Charitable Trust owns is always rumored. Dupont. I think nelson must have a big laugh. Where is he going to strike next . More money than ever in activists hands. Its interesting. Lets hit abercrombie. Stock is up 8 after the company did report good numbers. Hollister is making a comeback. Thats what it looks like. These are progressions. You get i dont mean to not stare at the camera. Comp Third Quarter 14 minus 10 now minus 8. Going in the right direction. Remember sears . Remember when the itw guy came in and the journal said thats what they needed was a good tool and dye man . Arthur martinez and hollister. I think die hard was before die hard. Right . The battery. Sears battery . Die hard was around before the movie. Yes. This is hollister 7. We keep getting a reinvention there. Teen apparel, fickle. Fickle is the main point. On fifth avenue they have that surfer bouncer in front. Its like a tidal nine 14th amendment issue. Ive never been there. The scantilyclad surfer doesnt do it for me. Way think of is the peak of goatpro. That was the goat on the surfboard with the gopro. Then they had the goat. That was the top. Youre not a believer the quad drone . I dont know. If i want a drone Northrop Grumman makes the best drones. You want a drone company. If Northrop Grumman merged with gopro, holy cow can you imagine . That would be like an episode of 24. You put a missile on your head while you are surfing and you take out the goat and the board. You could. Lets head to the bond pits for a change of pace. Rick santelli joins us from chicago. Good morning. Twoday chart says it all we still have the drift in yields. We are still drifting below the 2 2. 17 close of last year. If you look at may 1st you get a good idea what a top forming may looked like. April gives you a better look. Is it the top . Many traders think its possible. Look at april 1st this year date with bund yields. More exaggerated because move down and up was exaggerated. The pattern, very similar. Foreign exchange is where the actions at. Interest rate differentials. Foreign exchange forwards. Its all the same game. Look at dollar yen back to christmas of 2002. Thats the last time we were closing at these levels. Lets hold the date constant. December 2002. Now lets look at whats going on with euro versus the dollar. See how close it is . Granted there was one day, i believe march 13th when we settled under 1. 05 with the euro versus the dollar. Look at the dollar index. If you keep that same date christmas of 2002 and you look at the dollar index, other than the same day as the euro march 13th the dollar index had that slight move take that out, you are comping three months difference. Instead of december, april 2003. Why did i do that it . s all moving in the same fashion. As currencies weaken Interest Rates most likely arent going to be going up. Thats the dynamic you want to Pay Attention to. David faber, back to you. Okay. Thank you very much. Oil and natural gas Inventory Data due out later this morning. Jackie deangelis joins us from the nymex. Good morning. We are watching crude prices under more pressure this morning. Breaking under that 57 a barrel mark. A couple of factors to think about. Youve i got a stronger dollar. Thats one of the reasons. We have api Inventory Data last night that was bearish for crude. We saw a lild in inventories which traders werent expecting. With we get that doe report at 11 00, it will be interesting to see if that supports what the api said. I want to talk about a reuters report citing it saw a draft report of what opec will say on june 5th. They are talking about nonopec producers boosting supply. Thats also sending crude prices down this morning. Thats it for me at the nymex. Carl to you in california. Thank you. When we come back from the code conference in california does gms mary berra think well get that selfdriving car . If we do, is google interested in selling one . We got answers to both questions here at the conference. Well get to that. Can it make a dentist appointment when my teeth are ready . Can it track my crews performance, and protect their heads . Can it tell the Flight Attendant to please not wake me this time . At cognizant, we see opportunities for every company. To meet the new digital demands of their customers. Can it process my Insurance Claim . Like, right now . Can it download a track while im sampling it . Can my keys find me . With the power of digital, analytics and automation now every little thing can provide even greater value. Ok, so can it tell the doctor how long you have to wear this thing . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Allegations of many years of scandal inside fifa soccers ruling body just the latest example how an epidemic of corruption in sports politics, major corporations and on wall street. A new documentary with people whose lives led to disastrous results. Tom donaghee who bet on nba games tells how the slippery slope started. A friend of mine was looking at the lines in the nba games and asked me to help him pick winners. I was looking at the master schedule of referees and knew who was refereeing certain games. I picked some games for him. The games did very well. He called me the next day and we just had a frank conversation. I knew a certain line was way off or i knew a certain referee was going to give special treatment to a certain owner, team or individual player. I passed that information along to my buddy. He was kind of shocked that i could predict the outcome of a game. Im shocked referees give personal treatment to owners. Wow. I want to hear more. There are a lot more. Got to see that. A lot of gripping personal stories here of moral missteps and Innovative New research that explains why many people lie. Tune in to cnbc 10 00 p. M. Eastern and pacific for the premiere of dishons yestydishonesty, the truth about lies. Lets head back out to california and carl. Your car is often called your biggest mobile device. No surprise gms mary berra spoke at the code conference. They tried to pin her down whether she thinks well ever get a fully autonomous selfdriving car. I do think its coming. Again, there is a lot that has to come together. There are different technologies and developments in technologies, but i absolutely see it. By when . I think its more in the it will be a journey because its going to be there are legal things that have to change regulatory things that have to change consumer learning that has to go on. Then frankly, theres to your point scale as we put it on the vehicle. I think well see great advances in five years, ten years. It was tough to get barra to commit to anything. She seemed loathe to think apple would control much of the dashboard though mossburg tried to get her believe people prefer the function of a phone than their car interior. Morgan stanley, i received gm to equal weight saying they think the company will be forced to consider more radical changes down the road. That wasnt the tone barra tried to set yesterday. Morgan stanley piece, second paragraph says buybacks arent working. I dont know did she talk about consolidation at all . When i read that piece by morgan stanley, what i thought was fiat gm is going to buy you, price target is 90. I dont know if thats the chatter in the air . No. Yesterday was more about how big do your icons need to be on your dashboard so they are easy to use but not distracting when you drive. Another interesting topic yesterday, googles chief officer was asked whether they would be interested google in selling a selfdriving car if that came to fruition. He said they probably would rather do that with partnerships. Also said they are not interested in doing original content which i thought was interesting. Google so used to having pie in the sky ideas, trying to instill or display discipline when it comes to theme attic purity right now. Ruth poratt is the ceo and shes ruthless. Maybe tomorrowland is not google. It may not be. Its one thing to have the operating system the other thing to make a vehicle. Im not sure they want to do an internal combustible engine at google. 10 and 2, look at that, ive got to make a left. Yeah carl . Later on this morning, dick koslow will speak at the conference. And well have the head of target. Com. Target Digital Sales up 38 last quarter. Well talk to the global vp and the head of messaging for facebook and brian grazer whether he prefers tvs or movies right now. Great lineup. Thanks, carl. Up next weve got youve got them both on. I much prefer that one. This one cost a fortune this cost half a fortune. This doesnt do anything right now. Trying to save battery. Stop trading coming up. The Technology Changes the design evolves the engineering advances. But the passion to drive a mercedesbenz is something that is common. To every generation of enthusiast. The 2015 dream machines, from mercedesbenz. Todays icons. Tomorrows legends. Visit the dream machine event today for up to 3,500 towards purchase. announcer you run a business. 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Fast in the foyer [pronounced foyyer] or is it foyer [pronounced foyyay] . Fast in the hallway. I feel like ive been here before. Switch now and get the fastest wifi everywhere. Comcast business. Built for business. It is time with stop trading from jim. There is an upgrade by Goldman Sachs. Hold the buy ralph lauren. It said its too cheap. Thats not the kind of upgrade i want. You dont say that. This is what you do when you think something good is going to happen. Youve got to be careful. Steeple says its time to by bf corp. I thought that was a redflag piece of research. I said i bet there is more to it. I cant pin it down. Be aware. I think ralph lauren is going to buy. You noted it. You think goldman knows more than they are saying. Raised eyebrows. What have we got tonight on mad . Weve got last week i had doug parker from american air. He said the airlines its a price war. Southwest is one of the ones other than delta that added capacity. Gary kelly this group is a freefall. Maybe gary kelly is saying love should no longer be for sale. P and i think popeyes with many restaurant stocks including sonic, dine equity and jack are starting to come back. Theyre domestic plays again and people are worried about the strong dollar. The strong dollar figuring into investment decisions. Now there is something on that that says cancel power off. How can that be . Its on reserve power. Reserve power. Will robinson. All right. Thats technology all right. Thats something. Coming up breaking news on pending home sales. Interview with the president of target. Com. That is live from the code conference and more. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. Good morning and welcome back to squawk on the street. Im simon hobbs with sara eisen and david faber. Carl quintanilla is on the west coast again today for the code conference. What have we got in store for this hour . A lot going on in the world of tech a lot of headlines here at the conference. Gopro saying they are going to make a drone. Target saying they are open to accepting apple pay in stores. Sprint saying give us two years, well be the number one market. Coming up this hour, well talk to the head of periscope, head of target. Com facebook head of messaging, hollywood producer ryan grazer. Lets check where we are in the markets. We are down 78 points on the dow. Relatively rangebound if you look at the move we had recently. Unable to break substantially higher. Crude trades at 56. 76. Lets get to diana olick in washington with breaking news on home sales. Pending home sales up 3. 4 month to month in april. That is a surprise to the up side. The street was looking for barely 1 . A 3. 4 gain monthtomonth up 14 year over year. That is the biggest annual gain since september of 2012. Pending home sales which are based on signed contracts to buy existing homes are now at their highest level in nine years. The expectation was not so good because we had a disappointing april closing home sales. Realtors are saying that realtors are seeing strong foot traffic. The only problem as weve been saying over and over is very limited inventory supply. He calls it severe in some markets. Going regionally pending home sales up 10. 1 in the northeast. That is a big gainer after a disappointing winter in the northeast. Midwest up 5 monthtomonth. South up 2. 3 . In the west flat. Barely up 0. 1 . We were looking for just 1 so 3. 4 gain is a big win for pending home sales going into the summer. Back to you. Thank you very much diana olick. On to a large deal in the chip business. I think the largest weve seen to date. Avago buying broadcom for 37 billion in cash and stock. 17 billion worth of cash equity valued at about 20 billion or 140 million shares of avago. This is a company aggressive in acquisition. Benefits from a low tax rate begin its incorporation in singapore. And using leverage effectively. Its not afraid to take on debt to do deals. Almost in the mold of a private equity deal if you will. Avago stock price soared. That enabled it to do this very large deal to acquire broadcom. Back in october, sources tell me the two companies had talks but were not able to reach a deal. With avago stock price up sharply, talks resumed about six weeks ago and they were able to get a deal done at 13 multiple to ebitda. It is fairly high level. A significant premium even to the 10year highs broadcom had seen. It will create a large player in the combination of Wireless Communications fired infrastructure and enterprise storage. Last 12 months when you combine it talking over 15 billion in revenues. This is a deal that could have been structured as a merger of equals. It is not. It is a pure acquisition by avago. An aggressive acquirer. In an industry that at least what i heard from people close to the deal says they believe they need more sdal. That being broadcom. There is a great deal of cash used in these businesses. Hence, given that given the need for scale, given what is also apparently the rising cost of development, scale makes sense. You see the deal today. Yesterday it was reportedly the talks were by wall street journal, broadcom stock price up sharply, taking away much of the premium it might have seen today. Stock is down. Avago down a bit now as well. It is accretive off the bat talking about 750 million in cost synergies with 18 months of closing. Some investors i spoke to indicate their belief is you could see 3 a share in accretion three years out for avago. Most likely will continue its string of acquisitions as it is a rollup of a company that provides these chips to the likes of apple and others. So many chip deals. Hard to keep track. It is. This is the biggest one yet. Is altera in the works . It is believed. There were principle talks between intel and altera. No updates at this point. Another big mover today is costco in the red sharply. Reporting its first decline in existing samestore sales in nearly six years. What should you be doing with that stock . Here is paul trestle has a hold on the stock, 144 price target. Good to see you. If you strip out some of the crazy temporary things like gas and currencies the underlying results were solid, especially comparing them to rivals like walmart, were they not . Absolutely right. Costco is a very high quality retailer thats been posting strong results. Especially on a relative basis. That said current valuation, 25, 26 times forward earnings i think the Third Quarter print was simply just in line and with those head Winds Continuing of the affects and gas, increased investments in i. T. , we think staying on the sideline is the best approach for the time being. Break down the deal with gas prices and costco. Its not necessarily intuitive. They sell gas. What has the wild swings in oil done to the Profit Margins and what will happen down the road . Gas has had a very meaningful impact to costcos pnl. Its roughly about 8 sales, but it ranges with gas prices being still lower year over year its i now a smaller percent of sales which overall helps the companys gross margin. What well note in this particular print, costco sales missed a little bit. Expenses were higher than expected. Gross margins did beat. What well find out in the Conference Call in a few minutes is how much of that gross margin performance was due directly to higher margins and higher contributions from gas specifically. The call starts at 11 00. Cramer says when it comes to costco, its i all about the membership fee. Thats why you want to own this business. Thats whats been driving the growth. Do you agree . Does that make it a candidate for a longterm holding compared to some other retailers . Long term costco has a phenomenal business model. I would add that not only a high renewal rate on the membership fee, but they are continuing to expand globally. They are in multiple countries. They just did a big deal moving from American Express to visa that could pad the bottom line. Theres a lot of longterm factors to like here. We just want to wait a little bit better entry price point. Now we heard from a number of retailers you cover, which one looks like a better deal . We prefer within the discount space a name like dollar general, which is still a growth story along with solid samestore sales. No affects or currency pressures there we like the Athletic Group like foot locker that put up strong results. Within the Department Store space, nordstrom stood out in terms of their topline performance. Thanks for the tips. Paul, good to see you on the floor of the new york stock exchange. Thanks for having me. Call it the netflix effect. The invisible hand of the streaming media pioneer touched everything from the failed comcast time warner deal to net neutrality, and many other proposed mergers and acquisitions within cable and telecom. Joining us post nine to explain, Pulitzer Prize winning New York Times columnist jim stewart. Im glad you did this. Thank you. Netflix i mean it did figure prominently in comcasttime warner perhaps than you might have anticipated given why should its voice matter more than others. I would love to hear your thoughts about why that has been the case and what we can expect. Its completely fascinating to me. Netflix is not a party to any of these deals. If you look at what government regulators have been saying about them it almost sounds like coming from a netflix script. It echos what theyve been arguing and submitting to the government. They have really done a fantastic job on the Public Relations front, shaping Public Opinion and championing the idea of this open internet with themselves as the poster child of what you get. I dont think it hurts in washington everybody watches house of cards. Everybody loves house of cards and everybody was furious it got interrupted to be buffered. Guess whos the main carrier is in washington . Comcast who has become the one netflix is holding up. A couple of weeks ago Reed Hastings talked about the deal with comcast as a deal with the dove devil. Thats Frank Underwood language. Thats strong. Its out of a script from a netflix show. Maybe they are working on one. Netflix says its not just us. It just happens our interest dove tails with sound Public Policy because we are advocating for the consumer. I think its worth remembering that the regulators are supposed to be acting for the consumers. They are not there to protect one particular company or a handful of companies no matter how much they might happen to like what they are doing. There are some who say why shouldnt netflix pay more . Its using more. It is the main user of the highway. Why shouldnt it pay a higher toll to have its cars go faster . That is a legitimate argument nobody should have to pay for greater capacity. If you look at credit card companies, retailers pay, the consumer pays. Its not an unusual model. That argument as far as washington regulators seem to be concerned is over. Netflix won that battle. It has implications for all these other deals. Take the new charter Time Warner Cable deal. Since the comcast thing was vetoed, this has taken on a whole new dimension. A month or two ago i would have said no problem for the charter deal. That will sail through. No more. Do you think netflix will fight that one, too . They havent taken a position. I would say a 95 certainty while they may not try to block the merger entirely they will like with at t theyll say we want conditions, we want restrictions on this. They have leverage and can get conditions beneficial to them. They may decide to block this deal. Netflix may. Are you saying the government may decide . The government might, too. The landscape has changed. They are smaller than comcast. From a traditional, regulatory perspective, if you look at broadband as a National Market, which they seem to have done in conference as a National Market everyone before thought was a local market. There are only six major players. If you run the numbers on an already highly concentrated industry in which one participant is going to roll three into one, youve got problems. Percentagewise they are below comcast percentage of market share in broadband. What i found interesting was the interview you did with charter ceo on tuesday. We spoke about it at the time. He was emphasizing the social impact of what they were doing. Reduce the churn. Maybe create 20,000 jobs. You say the pivotal mistake was with comcast charging netflix. In a different political environment, that would have been okay had you nod had a democratcontrolled s. E. C. The idea comcast would charge somebody for interconnected to the network is not a new idea. It became cause celeb it was netflix that had to pay it. If i was running charter, i would be on the phone to Reed Hastings, if not already, then immediately, to make nice and assure him well behave. The things theyve been saying come out of the netflix playbook. We are not going to impose data cast and charge extra money. They are putting on the table a willingness to do what netflix is asking for. I think this may be good Public Policy. Its hardly a cut and dry issue. Netflix have done a brilliant job selling their point of view. They have. When they got the president to go on with his ipad and talk about net neutrality. John oliver that show brought 4 million comments into the fcc. That was huge. That was incredibly effective. By the way, why does everybody love them . They put consumers first and have changed the way the consumer view tv. You can watch whenever you want. They have done a lot. They are a symbol what regulators would love to see in terms of innovation. Would be interesting when apple enters the space. I think the house of cards thing is hilarious. Amazon is over the top, hulu. Its going to be interesting to see how this landscape changes. Thanks. Jim stewart. Up next back to the west coast. The president of target. Com and mobile will join us for live code conference interview. Hell weigh in on the future of apple pay and security and how they deal with competitors like amazon. The Technology Changes the design evolves the engineering advances. But the passion to drive a mercedesbenz is something that is common. To every generation of enthusiast. The 2015 dream machines, from mercedesbenz. Todays icons. Tomorrows legends. Visit the dream machine event today for up to 3,500 towards purchase. Female announcer sleep train challenged its manufacturers to offer even lower prices. But the mattress price wars ends sunday. Now its posturepedic vs. Beautyrest with big savings of up to 400 off. Serta icomfort and tempurpedic go headtohead with three years interestfree financing. Plus, free same day delivery setup and removal of your old set. When brands compete, you save mattress price wars ends sunday at sleep train. Your ticket to a better nights sleep welcome back to squawk on the street. We are live at the code conference in california where we heard from target about apple play. The president of target. Com joins us here. Cornell said weve got to thank amazon. They taught americans how to shop online but they dont own the market wholly. What did he mean by that . Amazon is a place many consumers made their first online purchases. You are an alum . I am. I worked there eight years. Ecommerce is bigger than amazon. Its about the next phase of retail. Target is excited to be part of that. We talked about prime. Cornell wants to tell the red card story. Its an important part of target. If you have a target red card all purchases at target are 5 off and you also get Free Shipping at target. Com and no fee for red card. Its a fantastic program millions of our guests use every day. Can you disclose how many millions . Its a High Percentage revenue and higher percentage online because of Free Shipping. You are spending 1 billion on infrastructure. Supply chain technology. Yes. Is the emphasis on me ordering and picking up at the Smaller Footprint Stores delivery . A combination of everything. We want to help our guest engage in target any way she wants. That can be buy online. Buy it at a store. We are committed to expanding offerings. 35 who pick up at a store do additional shopping . The number is that percentage and it continues to go up. Today is 15 of our sales at target. Com. Weve got amazon saying they are going to start rolling out sameday delivery for prime members in 14 cities. A lot of those cities its already two hours capability. How do you keep up with that speed . I saw the same article you did. We have 1,800 stores of target. They are in our guests back yards. We are shipping from 140 of those stores. Well expand that to over 400 by fall which will let guests get a wide range of products shipped for free with next day or twoday delivery. Cornell said it off the cuff yesterday, but i assume he was serious uber for instance could be a partner down the road. How serious are those kinds of things . Are they in the pipeline as we speak . Certainly conversations. Youve seen from this whole conference, its about blurring lines. What is a delivery company, what is a content provider what is a platform . There is a lot of blurring. We are interested in partnering with a wide range of people to help guests engage more with target. Everybody is trying to take stock of the consumer overall. Retail sales, at least the First Quarter, have remained tepid. Even in the face of declining gas prices. Target emphasis is on apparel, on home, beauty. Do you feel like the consumer is as weak or tepid as some argued . I can only speak for our business. We are pleased with results. You saw our most recent q12 announcement with strong sales and digital growth. We believe we are consistently growing our Digital Business at 40 and believe that will continue the next few years. We are pleased with our performance and see it only getting better. Is the emphasis for you on price or selection and convenience . Because its been argued amazon is emphasizing price less and less to the advantage of competitors like a best buy. Target brand promise, expect more pay less in a target experience. Whether thats in store or online, that is our focus. Thats how we build our relationship with guests. Should i expect to get the lowest price at target or is it more about getting brands, getting a Lilly Pulitzer i cant get anywhere else . Its a combination. We are focused on offering low prices. We want to delight you with the products we have. Its a combination of both. Not some are low priced and expect motion its both. Lilly pulitzer was a great example of terrific quality product at a great price. Please come back. Thank you. Thank you very much. When we come back a day after the arrest of top officials, fifa is planning to open its annual many conference in zurich. The top official has not been seen in public since the arrest. Live in zurich after a quick break. The pursuit of healthier. It begins from the second were born. After all, healthier doesnt happen all by itself. It needs to be earned. Every day. Using wellness to keep away illness. And believing that a single life can be made better by millions of others. Healthier takes somebody who can power modern health care. By connecting every single part of it. For as the world keeps on searching for healthier. Were here to make healthier happen. Optum. Healthier is here. Fifas annual Congress Opening today amidst the scandal. How real is this threat of a boycott of the world cup now . Simon, i think thats very hard to say at this stage what we can say is that the congress has kicked off behind me. All the delegates have been entering over the last half hour or so. Ive just come from the uefa press conference thats european football body. They confirmed the president ial election will go ahead tomorrow which is the first big thing they were trying to block and they failed to bach that. Thats not just pressure from inside the world of football fifa is facing. They are facing it from major sponsors. Budweiser, cocacola and visa. Visa saying unless fifa makes changes now, they will reassess their sponsorship. It might be these types of financial threats that well need to see in order to force fifa to change which as yet they failed to do. I want to mention one other sponsor, nike. They echoed similar sentiments. There was an extra line that grabbed attention. They said we have been cooperating and continue to cooperate with authorities. Interestingly, the doj indictments said a major multinational Sportswear Company was involved. We dont know who that is yet. President putin has thrown his hat in the ring and supported mr. Blatta. He said this is a clear attempt for the u. S. To spread its jurisdiction to other areas, and indeed, an obvious attempt to prevent blattas reelection. Whatever the motivation or actions of the last 48 hours, the congress is kicking off behind me and the president ial vote will go ahead tomorrow. From zurich back to sara. Thanks. Gopro soaring higher today. Gopro on the news that the company is working on drones and Virtual Reality. Hear what the ceo had to say about those new products. Automotive innovation starts. Right here. With a control pad that can read your handwriting, a widescreen multimedia center, and a headup display for enhanced driver focus. All inside a redesigned cabin of unrivaled style and comfort. The 2015 cclass. At the very touchpoint of performance and innovation. Welcome back to squawk on the street. Im Jackie Deangelis from the nymex. Iea out with weekly Natural Gas Storage report. Injection of 112 billion cubic feet. Prices down since then. 2. 73. A lot of traders are scratching their heads because we had volatile weather across the country and hot weather is coming. That means air conditioning use will be up. They were expecting to see a little bit less than this 112 billion cubic feet. In terms of pricing, they thought we would hold the level around 2. 79 where we were trading. We were trading higher than that, about 3 not long ago. Selling pressure likely here some profit taking. Natural gas is probably going to be a volatile trade as we see how the weather patterns do develop. Thats it for me at the nymex. Here is the cnbc news update at this hour. Iraqi military forces along with Shiite Militia continuing their advance on isis positions at the countrys largest oil refinery. Iraqi Security Forces have poured resources and manpower trying to secure the facility. 234 migrants rescued by the Italian Coast Guard arrived in sicily this morning. More than 8,000 people fleeing conflict and poverty landed on european shores this year mostly italy and greece. George pataki announcing his intention to run for the white house. He declared his system is broken and its time to take back the government. Amazon will offer limited free sameday delivery under its prime shipping service, allowing prime members free service on orders over 35. Its available in major cities including now expanded service in san diego and tampa bay. Thats our cnbc news update for this hour. Back to you. Weve got breaking news. Want to go to washington. News on the troubling irs hack. Cnbc has learned the fbi has opened its own investigation into this irs hack that was announced earlier this week. About 100,000 people saw their data and possibly their irs returns hacked by alleged hackers who got in through the irs own website. The Criminal Division was investigating this. Now we learn the fbi opened its own investigation into this. They bring a wealth of experience particularly because at the center of this could be global criminal gangs of hackers that the irs said may have been involved in this. The irs and fbi have a lot of experience with this. Now the fbi is going to be diving in with their own resources, as well. Well see what they find. Gopro Ceo Nick Woodman announcing the company is making a drone and working on Virtual Reality products. Drones for the holidays josh . Thats right. Gopro Ceo Nick Woodman says drones are the next big thing for his company. Thats big news for investors, but woodman telling me the move just makes sense. I think people are already associating all this incredible aerial content with gopro today. Our customers all the time are asking us will you please make a quad copter because i want to buy, i want my whole experience to be gopro. When we think of the brand coupled with our understanding of the consumer coupled with our Distribution Network we already have in place, i think we are in a good position to succeed. Bottom line, what does this mean for gopros business . Analysts at doherty and company crunched the numbers. They see it could add nearly 500 million in revenues to next years numbers. To put that in perspective, gopro in total about 1. 4 billion in sales last year. The other big announcement woodman made was later this year gopro will release a new sixcamera spherical array. That will allow users to shoot content for Virtual Reality which he sees as the next big wave of content creation. Once facebook acquired oculus and basically made it official they were placing a bet on Virtual Reality being a mass market platform for consuming content in the future we recognize we are well positioned to take some of the development weve done over the last few years and commercialize it. Investors certainly seem to like what woodman had to say. You see the stock moving sharply higher in todays trade. Simon, back to you. Ive got to think apple is on it as well. Josh lipton with gopro. Could we findly be on the verge of that major surge in Consumer Spending . Pending home sales 30 minutes ago rising to a nineyear high after Consumer Confidence yesterday unexpectedly ticked higher from a fourmonth low. Directoff of global macroand Fidelity Investments and deputy chief u. S. Economist at ubs. Good morning to you. Could this be a big move do you think . Our Economics Team continues to believe, despite the weakness in the last quarter or two, that the u. S. Economy remains firmly in mid cycle territory. So this data doesnt surprise me. Its been slow 2. 5 real but its been stable and steady. We dont see much in the way of evidence that its going to end soon. Drew, could you be more optimistic . Home sales at a nineyear high many would seem something is moving, albeit with inventory. If people are willing to buy a home they are willing to buy other things. I think it feeds back to the labor market. People are finding work. Firms arent laying people off. Only thing missing is wages. That will be coming soon. Everyone can sense that. Thats why you are seeing this activity. Why do you think importantly that as Interest Rate rises could spur Economic Growth . Its simple. Interest rates are simply reflecting the time value of money. If there is no time value to money, people wait for perfect information to make decisions. If you raise Interest Rates, it puts a value on that time. People cant wait as long as they would normally wait. They have to make decisions with imperfect information. It prompts consumers to make purchase decisions. If you leave rates at zero people wait indefinitely. Would you agree with that . Thats an important break from a lot of what we discuss on the network, that Interest Rate rises could spur growth. That we get faster growth with higher Interest Rates. Yeah. As long as rates rise gradually and we dont have Something Like a taper tantrum happen again where its a sudden 150 basis points reset in a matter of a few weeks and Mortgage Rates shoot up. If its a gradual increase to moderate levels and the fed raises rates 100 basis points the next year year and a half and bond yields go up over that period of time i think it will be fairly benign for the economy at large. We have focused a lot on what might happen when you get that first rate rise. It now believes trading liquidity and u. S. Credit markets has fallen by 90 from 2007. Thats how tricky the situation may be on the bond markets. What we havent discussed is if the fed can raise rates by 25 basis points and then convince people there are no more rate rises for a considerable amount of time what that could do for asset markets, could you see a major rise not just in bond markets, but on the equity markets on that basis . We dont necessarily think the first couple of rate hikes will hurt markets all that badly. Our strategist has been clear on that point. The thing to bear in mind is i think one of the risks out there is that this idea the fed is going to go and stop p they said they want to go two times this year. Ubs, we believe them. You have to bear in mind the reason they tend to hike rates the manner which they hike them everything they target trends. Unemployment trends inflation trends imagines trend. They all operate with a lag. By the time you see them youre behind the curve a little bit. Thats why the ted has this game of catch up and has to move on a more consistent basis. People should be aware that is a material risk as you move in that the fed might have to be more aggressive even than they are saying despite the Market Pricing less than that. Want to focus whats happening globally for a moment. Does it matter to u. S. Stocks chinese stocks fell 6. 5 overnight and nikkei is on a tenday winning streak the best in 27 years. Does that impact us here . It impacts global reflation which is happening at a robust clip despite the fact the fed is trying to go the other direction. It gives tail winds for the fed as it tries to normalize rates, we are getting reflation around the world. Japanese are doing it europeans, chinese are doing it now. That is a powerful tail wind and should boost growth globally in a couple of quarters at least. That is bullish. The u. S. Is in a mid cycle expansion with a dash of late cycle in it the wage pressure is starting to come up. Europe and japan are in mid psyche will a dash of early cycle from this central bank reflation. That is a bullish background. Today we had the stability report from the European Central bank. The guy that was leading that debate said the main problem we may have we may not be overvalued on assets the main problem may be asset losses. Valuation could fall. That unnerves people. When you talk about whats happening in china or japan, surely the concern is that actually that is not sustainable and those asset prices fall and they cause eruptions here. Certainly. Vice chairman fischer said as much. I think the fed is worried about Market Operations market liquidity, the response to the rate hike. Thats why they are going slow on this. The problem from our perspective is going slow and waiting too long are separated by inches. I think one of the problems is that the fed waits until they actually see inflation and something goes wrong with the rate hike cycle, say they hike rates and the market doesnt follow, they are in a bind. If they go earlier and nothing happens or the market doesnt follow the way they want theyve got time to correct. I think though having pointed us towards september, that ship already sailed. Now they have to worry about making sure the market is fully expecting it when it happens. Good to talk to you both. Thank you for your time. Coming up on the program, the ceo of periscope joins squawk alley live from the code conference. When you do business everywhere, the challenges of keeping everyone working together can quickly become the only thing you think about. Thats where at t can help. With the tools and the network you need to make working as one easier than ever. Virtually anywhere. Leaving you free to focus on what matters most. Are socalled activist investors hurting the entire American Economy . One strategist makes a very interesting case on just that. Check it out on trading nation. Cnbc. Com. Take a look at the industrial the sector. Brian sullivan back at hq. In a different suit than 30 seconds ago, by the miracle of television. All ten s p 500 sectors are in the red leading the declines. Energy and industrials. Industrials are being dragged down in part by united rentals. That is currently the worst performing stock in the s p 500. This is interesting, guys. The company spoke at a Keybanc Capital markets conference today. There were reports by reuters and others they were talking down utilization rates and making down beat conference overall at the conference. That hasnt been confirmed by us but a number of reports have that out there. Uri is one of the decliners. A double dose of sully. Now to santelli. Thanks, sully. There is a game i lookic to play with some of my buddies, whether its riding the train because we all live far away and come to the schaipg every day. We call it fixed income chess where you play some what if games. There isnt necessarily an answer or outcome with high probability. Its the exercise. Im pretty confident i can say bill gross plays fixed income chess. Thats how he arrived at something so intuitive that these bund wields cant be where they are at. Ultimately it makes no sense. If it makes no sense over time, reality will reign. There are so many more entities involved in the discovery process that used to be only the venue of markets. Well play like i did recently lets think about what would happen medium short term long term with regard to Interest Rates should they rise and could they really rise. We are going to go through this quickly. Who are the main holders of fixed income markets, specifically the high quality stuff, insurance and pensions mutual funds. Insurance and pensions they cant find enough product. They have asset liability mismatches. You dont have to worry about them in liquidation mode. Mutual funds. Bond funds are something to ponder a bit. A lot of the nervousness is there daytoday. What does that leave us with . Leaves us with sovereigns. Held in inventory and collateral. Collateral is probably the biggest part of the market, call it 2 3. What you have left is 1 3. Should we get a sharp runup in rates, most likely its going to be this camp the inventory camp. Thats like the tradeable, fixed income market. The reason that inventory is so low is due to dodd frank. Should we get a quick spike up in rates like we did october 15th what you would have to consider is its most likely going to be in the short to medium term. I dont think you have to worry about a big spike in rates long term. Why . This is always going to be capped by growth. I dont see the big growth in the big long term. I see middling to average. I would like to be surprised. That leaves us with looking at central planners and central bankers and lesser credits. Should we get a quick move up to 3 , i think what would happen is you would have Central Banks thinking, oh my goodness put exit rules in . Try to stop the process . Do more qe . Its that group that is the Scariest Group if this gets messy, everybody has to react emotionally. Central bankers need to let it play out. This is not going to change. The tradeable amount that can move the market a lot isnt going to change. What never changes is the fact that long termprevail. Just like bund yields being at four basis points. Back to you. All right. Thank you very much. Rick santelli for laying that all out there up next cocreator of the hit show empire danny strong plus the shows coexecutive producer, brian grazer. Its part adrenaline and part adventure. Its part geek and part chic. Its part relaxation and part exhilaration. Its part sports car and part suv. And the best part . The 2015 gla. Its 100 mercedesbenz. [ female announcer ] who are we . We are the thinkers. The job jugglers. The up allnighters. And the ones who turn ideas into action. Weve made our passions our lifes work. We strive for the moments where we can say, i did it we are entrepreneurs who started it all. With a signature. Legalzoom has helped start over 1 million businesses, turning dreamers into business owners. And were here to help start yours. If you want to succeed in business, mistakes are a luxury you cant afford. Thats why i recommend fast reliable comcast Business Internet. They know what businesses need. And theres a nomistake guarantee. If you dont like it, you have thirty days to call and get your money back. With comcast Business Internet you literally cant mook a mistick. I meant to say that. Switch today and get the no mistake guarantee. Comcast business. Built for business. Welcome back to the code conference the hit tv show empire has been the first tv series soundtrack to top hip hop and r b charts. Coupled with a Strong Social following and endless celebrity cameos, the show is a sensation. We had a chance to sit down with empires executive producer and media mogul brian grazer about his thoughts on movies and television as Distribution Channels in and of themselves. Would you argue it has the ability to sustain the conversation from longer period of time. And certainly thats whats supercool about doing empire above and beyond a Beautiful Mind and won an oscar and different movies but never had such an explosive nature on such a sustained basis. Now that empire is streaming on hulu we asked him about what he thinks on the future of streaming content. It changes the way i think of how i sell to networks. That i can sell into their afterlife as well. And that means that i can say to them, look, its going to be a onetime viewing experience on day and date the Way Television really works. But people are going to want to watch this theyre going to follow it its going to have an aftertaste. I would guess everything will be mobile. And then if you want you will just sling it on to a bigger screen. Finally we caught up with cocreator and actor, danny strong, who weighed in on the success of the shows music. Take a listen. We hoped we would have songs that would be hits and fantastic songs. Its ridiculous. Its amazing. I was always nervous about the nervous. Lee daniels was confident. He knew wed be able to nail it. For me i thought the music is the real wild card. Because our characters are stars. And so the songs have to be believable hits. Or the show doesnt work. And for me i it just made me very nervous. But it seems to be pulling it off. Simon, i dont know if youve seen the show they have a pretty good social media game and coming up in squawk alley well talk more to grazer about whether he prefers movies or television right now coming up in the next hour. Thank you very much. Carl. Much more of course from the code conference. Xiaomis global Vice President will join carl and the gang the ceo and can he founder of periscope will be here and facebooks Vice President of messaging, joining squawk alley, when we come back. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Hi, im Henry Winkler and im here to tell homeowners that are sixtytwo and older about a great way to live a better retirement. Its called a reverse mortgage. Call right now to receive your free dvd and booklet with no obligation. It answers questions like. How a reverse Mortgage Works how much you qualify for the ways to receive your money. And more. Plus, when you call now, youll get this magnifier with led light absolutely free when you call the experts at one reverse mortgage today, youll learn the benefits of a governmentinsured reverse mortgage. It will eliminate your monthly mortgage payments and give you taxfree cash from the equity in your home and heres the best part. You still own your home. Take control of your retirement today lets take a quick look at the markets. Under pressure, off the lows of the session. The dow is down 73 points. S p is down eight points and energy simon just took the bottom spot in terms of Industry Groups from industrials awaiting the new data from the government on oil. Oil is under pressure. 56. 73, wti. As far as the data is concerned, dont lose sight of the fact we had the best pending home sales figure in nine years. Within the last hour of the program and that builds on betterthanexpected Consumer Confidence yet yesterday, which leads to the question that we raised, whether Consumer Spending could surge from here. Obviously thats something that a lot of people have been waiting for. And a great debate as to why its not happening. Particularly with the lower gas prices. The other data point of the day, jobless claims unexpected rise, Still Holding above the 300,000 level critically for the 12th week in a row. Next week well get a new jobs report and see if the labor market momentum continues. And gdp could be negative. It could be ugly. Economists say you could write it off due to temporary factors. Quiet is how temporary and does any weakness ling near the Second Quarter and the secretary sekd half of the year. If you believe that the stock market will bounce thats when you think that the earnings are going to come back. Thats what the bulls are kind of clinging to as things stand. Did has been a seesaw week. We had a sharp down day, a sharp day yesterday and now lower today. Taking a look at oil prices here. 56. 66 as i mentioned, under some pressure on a stronger dollar. Lets go over to jackie de angelis at the nymex with breaking news on crude. We just got the number from the eia on weekly inventories for crude. Draw of 2. 8 million barrels. This is a bigger of a draw than expect. Despite the fact that the api last night reported a build. So interesting to see whats happening with prices here. We were down 83 cents before the number came back were rebounding a little bit. Now over 57 a barrel. Which is a key technical level. I will say this whats buried in the report that doesnt come on the board that will be key is the u. S. Production number. Did it rise or did it fall . We did get a reuters report this morning saying that a draft report from opec says they expect the