Transcripts For CNBC Squawk On The Street 20140612

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week. you can see moving up a bit, though, of course, after hitting 2.44 not that long ago, 2.40 not that long ago. still less money if you give your money to spain for ten years or france and not much more if you give it to italy. >> the turning report the jobs report last friday. since then we saw treasuries sell off, yields go up. this morning the data not too hot. >> let's give a look at oil prices rising concerns about unrest in iraq. perhaps the idea that the islamists are as much as only 70 miles outside of baghdad, a scary situation developing there but having an impact as you see on crude prices. to our road map here back in the states with the markets, that's where we're going to start. stocks breaking their winning streak. jobless claims missed and global uncertainty as i mentioned is returning to the headlines. >> david, amazon streams, a new perk for amazon prime. and new competition for beats, spotify and pandora. >> lululemon profit lunges. lowers forecast for sales and profit. the stock is taking a big hit including one from its founder. >> all right. let's get to the markets here. retail sales for may weaker than expected, up 0.3. if you strip out autos, sales rose only 0.1%. sales for april were revised upwards. jobless claims rising slightly last week. the data one day after the dow and the s&p posted its worst session in three weeks. now that's not saying too much, given we, of course, had much of the gains for the year in a short amount of time leading up to let's call it yesterday, being up 5% for the s&p, but you mentioned sort of these not -- not great signs at least one way or the other. >> everybody is supposed to bounce back after the bad weather dissipated and here we are into the spring time and the numbers are eh. we will talk about retail sales in a moment. people were looking for a gain of 0.6%, we got 3% despite auto sales were strong. >> i don't think anybody has a real clear idea where this economy is going. i really don't. i mean if you look at where retail sales have come in, in the face of what had been some more positive news about the economy, some forecasts being taken up, jan from goldman saying above trend growth for the first time since the crisis, now you've got your eye on crude oil north of $106 today, we're not in the summer driving season yet which is about to kickoff. if you're worried about the economy, if the consumer is already feeling a little bit of trepidation as to where things are going, now they're going to potentially see gas prices rise where does that leave you. >> not as much of an impact it would seem as in years past. we focused on it for good reason. fuel economy has gone up a lot. maybe at the margin it's not quite as big a hit on the wallet of the consumer. >> a headline at least. if you see -- you pick up your paper and you see iraq unrest, gas prices pushing higher, it leaves you with at least a little bit of concern you didn't have as of a week ago. >> we have over $100 wti and brent crude the international benchmark trading higher. watching some of the other signals in terms of trading. yesterday the volatility index, the vix, had its biggest one-day move since mid-may on that sell-off. >> is it like 11 and change or 12. >> still historically low. >> low volatility, low volume, tight trading ranges. what's the next big catalyst for a move? >> that's one of the big questions, the complacency you mention. that's starting to get real pick-up in talk among market participates that there's just too much complacency and at some point you're going to see this pullback people have talked about or feared. >> right. >> just hasn't taken place. >> you never know where risk is coming from to that point and this week i think many of us would argue, i wasn't really following iraq that closely. >> nobody was. >> and frankly did not understand or realize fully the gains that were being made and the possibility of all-out civil war in that region. now suddenly we are dealing with that, dealing with higher crude prices and to your point, what may or may not be the result of that in terms of our economy. >> always the great unknown, right. you guys follow these markets forever. i mean, eric cantor losing was a shock heard around the world from certainly washington to wall street. nobody expected that. nobody including our government, i think, at least from what you're reading this morning, had a real idea of how bad the situation and how quickly it was deteriorating in iraq was developing. >> well let's see what to make of these risks for the market, for the economy. let's bring in a panel, mark is the chief investment strategist with janet montgomery and michele myers senior u.s. economist with bank of america merrill lynch global research. you were expecting 0.9% increase for the month in retail sales. 0.3% was all we got. >> i know. it was disappointing. we thought we would see a bigger increase in spending on auto sales, given the very sharp increase in unit auto sales and nominal spending was up, but it was fairly modest. perhaps that suggests there were price discounting in the month for auto sales and outside of that, the underlying story was still pretty soft. core control auto sales were flat on the month. this is may. so, you know, in terms of thinking about the reversal from the weather, it should have been happening. it should potentially still be seeing some momentum and appears it's just not the case. i think we have to be a bit concerned about what it means for the second half of the year. >> i was going to say, disappointed, concerned, yes, but as does it change your outlook? 70% of the economy is consumer spending. when you get a soft retail sales number going into the spring when everyone was expecting breakout growth does that change that story? >> i think you to think twice about it, yes. i mean, we're still in the camp that you get a nice payback in the second quarter, gdp in q1 was weak, you get that bounce into q2. that looks likely, 3.5 to 4% growth is definitely possible in q2. the question, though, is what about the second half of the year. will we continue seeing momentum build. we had been saying that we can get to above 3% growth in the second half of the year. as a lot of these positive factors start to work their way through the economy. but the data we're seeing so far is mixed and today's report is on the discouraging side. >> i want to briefly interrupt if i can to bring you news in terms of changes in the top levels of the executive ranks at twitter. keep an eye on that stock. there had been discussion of the possibility it was re-code that report reported ali rowghani who had been given the task of bringing in more users might be reshuffled, he's been reshuffled out of his responsibilities according to an ak released from the company saying that he is no longer chief operating officer of twitter. he will continue to be a twitter employee and act as a strategic adviser to the ceo. there is no replacement expected for the chief operating officer role and all of his duties will be assumed by other members of twitter's management team. just -- sorry to interrupt. we can get back to -- >> kara swisher reported on recode overnight and laid out as she said it was. want to get back to the markets and economy. mark, bring you into the conversation. michele painted a disappointing picture for retail sales in the second quarter or second half. what does it mean for the markets? how far are valuations from economic fundamentals right now? >> well, we have a view that the valuations in the market are full, not stretched. and so what we're looking for is decisive evidence that the economy is going to accelerate to a level that's going to support the kind of profit growth that warrants full valuation in the market. we do think it can get there. today's retail sales report did not invalidate that forecast and as a consequence, we remain generally constructive on stocks. in the meantime given the fact they have full valuations which makes them vulnerable to a setback on less than perfect news this kind of data like today's retail sales number is a reason for investors to give a pause to the purchasing of equity prices which i think may entice investors to step back and seeing sloppy trading yesterday and maybe carry on into today as well. >> you think we'll see yields go further down from here. we are seeing pressure this morning buying of treasuries on the softness in the economic reports. >> well, certainly as it relates to yields on bonds, we like many were surprised. we started the year we would drift down to 2.4. there's legitimate reasons for that short covering geopolitical tensions and what not. at the same time there's a global arbitrage taking place as mentioned earlier. spanish bond yields of 10-year equivalent maturities are below that of u.s. treasury yields. in terms of the savings glut, due to the mass liquidity injected by central banks all around the world that's finding its way into u.s. treasuries. while i ultimately think we'll see yields grind higher on the back of better economic news and the consistent tapering of the fed's quantitative easing program a cap on that will be applied by the global ash train taking place. we don't look for run away yields, we look for them which would be a healthy byproduct of economic growth to move higher gradually over time and restore the three handle at the beginning of this year. >> all right. guys, thanks very much. mark, michele. back to the twitter story, the coo has resigned, david. the stock has been under siege all year long. it's down more than 40% year to date. also of note, they're not going to have a new -- they're not going to have a new coo. >> no. >> which is interesting in and of itself. but really, there have been questions for the last many, many months over their lack of user growth, it's been one of those stocks that ran up so much and got absolutely hammered and hasn't really recovered. >> it hasn't recovered really from the lockup. many of us may have underestimated the lockup would have given you had management saying we're not selling and assumed many others wouldn't. there were so many other venture firms that owned smaller pieces that were happy to hit the exit button and that had an enormous impact, of course, taking that stock down dramatically in the earlier part of this year. it has seemed to at least stabilized of late. not -- i can't -- i wish we could offer more insight on what's going on in the executive suite there, why this gentleman is departing although staying with the company in an advisory capacity and why they feel they're fine without filling his role. hope to do that, always difficult to do so in the middle of a show. >> one of the things kara pointed to in her article, core internal reception after "the wall street journal" article at the end of april, actually did a profile on him and they called him twitter's mr. fix it. said he was seen inside the company as the co-ceo among employees to costello. perhaps that reverberated. but the performance issues, 200 million users in 2012. they wanted to get to 400 million by the end of 2013. they were nowhere near that point. they were still in the 200s, 240 million users. >> there's his tweet. good-bye twitter. it's been amazing ride and i'll cherish the memories. there are a lot of other metrics you can measure this company that are growing quite quickly. we've heard costello talk about the scaffolding as his term, round the business, being how do you remove that. the same way you don't like walking in the shadows of shaffolding in new york city which we often do. how do you remove that to gain access. that's been a key question for the company grappling with the idea of slowing user growth. that's the reason many perhaps for not being positive on the shares. >> from a stock standpoint you had the argument growing louder that you have to make a choice between twitter and facebook if you want to own one of these stocks. we've heard it from analyst who is came on the program and said such things and people have started voting with facebook over twitter, that you -- if you want to own these kind of stocks just to make your decision and one clearly seems to be going in the positive direction and clearly has not. >> and, obviously, the size of the two companies. the market caps alone. >> valuations. >> $170 billion market value for facebook and now we're roughly at $220, $21 billion. >> facebook getting into other businesses as well, relying on its core advertising, trying to beef up video advertising, get more money out of that, but still needs to grow that user number, 240 million versus a billion. >> and facebook up 20% year to date by the way and to twitter's down 44%. so -- >> 44%. >> people have been voting with their dollars. >> that is a -- yeah. that tells the story right there. we're going to be watching twitter shares, you see they did reverse in the early going. we'll see how they perform once the market opens about 16 minutes from now. coming up lululemon shares, they are also taking a lot more of a hit in the premarket and amazon launching a new music streaming service today. also ahead, republican congressman scott garret of new jersey, hear what he thinks about eric cantor stepping down as house majority leader after he lost his primary. another look at futures on this thursday morning. we have more "squawk on the street" live from post nine at the nyse when we return. but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running. being able to pay as we go to is crucial for a start up.deas. having to fork out a lot of money up front was risky. we can launch a feature really quick, and if the feature doesn't work, we haven't lost anything, and we can have something up and running in days. and this would not be possible without the cloud. we are now supporting over 25 million users each month. . shares of lululemon down sharply in pre market, despite better than expected first-quarter results. the yoga wear retailers issuing full year guide angst below analyst forecasts. courtney reagan at hq with more on lulu, down 17%. the downgrades coming in as we speak, read one this morning from stifle and i would assume there may be more. >> we'll hear more both today and tomorrow because we got a sour report from lululemon. really very little to be bullish about for the yoga wear retailer. so for the fiscal first quarter lulu did beat expectations by 2 cents on the bottom line with revenue of more than $384 million. also a slight beat. but overall comparable sales increased 1% with the on-line sales strength pulling up a negative 4% store comp. the guidance that's really hitting shares hard for the second quarter and full year. below analyst consensus. it's lululemon's ceo first full quarter at the helm. and he notes in the earnings release, quote, despite a reduced outlook i'm confident the work we are doing today will only enhance our premium positioning as we continue to lead as the market innovator but on the earnings call wall street looking for something a little more concrete when it comes to what lululemon is doing to actually get there. we haven't heard a lot of true action plan from this new ceo yet. the yoga wear retailer announcing a $450 million share buyback and the retirement of cfo john currie, though like former ceo christine days retirement, the replacement has yet been found. currie will stay on to the end of the fiscal year. despite founder chip wilson voting his 26% stake against board members and chairman, both have been re-elected by shareholders along with the rest of the board. but, of course, outspoken chip wilson making his feelings heard that perhaps those two board members don't fit as well with the core brand at lululemon. now the earnings call currently under way. we'll get you the latest as lulu has to answer some pretty tough questions from analysts today. >> yeah, they are. courtney, thanks. you've got inventory rising, they don't have enough traffic for sales to move it, they are going to have to become more promotional at least the fear on wall street. i was reading through this note on the downgrade from stiefel, worried about margins. a brand people used to want to pay full price because of scarcity value, now suddenly the paradigm seems to have shifted in terms of how they will draw business. >> the last point you made, firsthand, as someone who bought the $90 yoga pants it's true. their reputation has been damaged. first the sheer pants that they had to recall, then the founder's gaffe about women being too large in the pants an then the management changes. the ceo has been there since january, called this year transitional, but i think analysts have been surprised at how tough it's going to be lowering guidance into next quarter and what the cat list as courtney mentioned to bring the sales back how do you recapture the fans paying that top dollar for best quality kind of clothing, when they've gone elsewhere. it's a competitive space. you have gap's brand, ath let ta. >> under armour. >> nike. >> so it's a very different place then when lululemon started. >> they note they end the quarter with $752 million in cash. that is up. they are instituting a $450 million buyback. they get an opportunity should they choose to use it today to buy back the stock. >> good opportunity. >> cheaper than it was yesterday. cheaper not in sense of the e multiple but lower price. up next wall street veteran art cashin shares his market words of wisdom as we count down 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cantor's loss was the big fuse. we did discuss what was going on in iraq as it related to oil prices. seems as though today that is having a lot more of an impact, perhaps it was even yesterday. >> beginning to yesterday, but i think it's really caught the world's attention now the fact that they got into tikrit easily. these cities are falling to very small forces and in a matter of days and sometimes a matter of hours, and it looks like they're trying to circle some of the key oil producing regions in syria, parts of iraq, so that's got the market's attention. we're beginning to see a slight drift toward a flight to safety. you can see it a little bit in bonds. not quite big enough yet. we'll have to look at the yen and other places. >> not the yen but gold a little bit too. >> we'll see if it starts to kick in. i think people are getting concerned. the leader over there is said to be a very charismatic fellow. this may be far more problems than we see in the near term. >> not that it hasn't been problematic for a long time but hasn't been a focus. everybody starting to look at their maps of oil production, not just in iraq but through the region, syria does not have significant oil production, civil war raging there now for many years, does seem to be spreading. can't be good. >> i'm just wondering, i mean we were talking yesterday about the world bank cutting its forecast about eric cantor, none of them seem to be underlying reasons why the market sold off yesterday, but how vulnerable is this equity market given the record runs we've seen, two excuses for selling off? how much does it want to sell off? >> it could be because it's clearly overextended. i mean, yesterday was a kind of quirky day. the dow was pulled down pretty heavily by boeing. okay. and they had some problems in the relationship with the eads that was a downgrade and, in fact, boeing may have been the only true cantor -- >> right the import/export -- >> bingo. >> and then you had the s&p got pulled down by bank of america which was the lack of a settlement. so we're somewhat vulnerable here. one last wacky note from trader folklure, the thursday before expiration week has a history of volatility. don't ask me why, i'm like christopher columbus, i know the moon has something to do with the tide. i don't know the celestial mechanics. if you look back 70% of the thursdays before exploration week very volatile. >> thank you. >> of course. >> he does know the world is round as well. the opening bell just a few minutes away. i always say be the man with the plan but with less energy, moodiness, and a low sex drive, i had to do something. i saw my doctor. a blood test showed it was low testosterone, not age. we talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. women, especially those who are or who may become 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cnbc's "squawk on the street" live from the financial capital of the world where the opening bell is going to ring in 30 seconds. in fact, sometimes they start ringing it a little early. there are the applause. right there. of course on this thursday we are looking at potentially a lower open for the market a bit unrest in iraq, starting to affect oil prices which is bleeding into other asset classes, including gold which is now a little higher. and there you can see the real-time exchange. [ applause ] here at the big board, a leading career platform in china. celebrating its initial public offering here at the nyse. zhaopin means higher or recruit. at the nasdaq mobile iron, an enterprise mobility enterprise company celebrating its initial public offering. not seeing as many as we did during a flurry in the year. every cloud computing with a business model of some kind was happy to come public. >> interesting to see another china based ipo in the u.s. we've seen a number of them this year leading up to the biggie, alibaba. >> not that far away. jd.com was a couple weeks ago, that was an important one, another ecommerce play in china. alibaba a lot of people counting down to that, as much as $25 billion if you can imagine, a valuation that may exceed $200 billion, we'll see. we'll get a lot more information as we go along here in these next few weeks including perhaps by july at least we hope to get the first and second quarter in terms of results from alibaba. remember all we're working off right now is the fourth quarter of last year when we look at that company. >> watching consumer discretionary off the retail disappointment this morning. was the one s&p sector year to date in the red going into today. it's still there. a middle of the pack story today in terms of the losses from the discretionary space, but that should be closely watched today given those numbers and then lulu on the back of that disappointment off the open, is down 16%. >> yeah. certainly a rough quarter, rough outlook for lululemon which makes it interesting the other retail earnings in focus, restoration hardware, had a pretty solid quarter, also got decent results out of lands end. makes those retailers that did well actually look even better perhaps to investors given all the head wind that sector has been facing. >> real question today, too, is how the market will respond to the situation which is rapidly deteriorating i think in iraq. oil prices have surged, both wti and brent. it's geopolitical concerns that we're watching today. political concerns from the day after the cantor defeat. and trying to put it all into perspective on what it means to a market that's run a lot. >> that has run a lot, right, and whether it's a short term feature that we focus on for a couple of days and then move on or whether it's going to have a longer term impact. on the subject of oil and gas, want to take a look at shares of anadarko. many may have noticed yesterday very, very strong. jim and i were talking about it a bit yesterday. a lot of option activity. it was up over 4% yesterday. now, you know, there's also martin schwartz, big holder here, at newburgher berman, has been forever. a lot talk about consolidation. exxon mobil's name comes up most often and i said a number of times while that might happen down the road, didn't appear anything near term. i can tell you in terms of exxon mobil at this point there's nothing going on in terms of their interest at some point down the road hard to speak for, but right now nothing. i did want to point that out given that stock was up sharply yesterday and has been an incredible performer out of an na darko because of fundamentals and takeover reports. >> unusual activity you mentioned the na gear yan brothers regulars on halftime show have been calling attention to this over the last couple days, unusual as they say option activity in that name and one to keep an eye on for what that means. >> yeah. >> i just want to bring in the fact that economic data didn't really do anything to lift the mood today. we were talking about geopolitical concerns, jobless claims went up another 4,000 last week. it's still sort of an improving trend if you smooth out week to week. retail sales were a big disappoint. the biggest part of our economy, consumer spending, only 3% rise in many versus the 6% expected. >> i want to get before we -- hewlett-packard shares i did want to note, having a fairly strong up day on research this morning. goldman sachs had a sell on this stock for a long time. that was not a good call, i think to say. $32 price target is now where they are. they had been at 25. they are now in neutral and goldman says listen, we got it wrong. >> capitulated. >> hp management has executed far more than we anticipated. they did not do well. up 50% since they added it to the sell list. that's not the way it's supposed to go. benefiting from that upgrade to a neutral at goldman sachs. >> twitter is active this morning, actually now moving into the green following news of this management shakeup at the company. coo ali rowghani is out. we want to bring in cnbc's john fortt from the north side festival in brooklyn with buzzfeed and lara ventures advisors john stein burg. what's your take on this news? >> well, i'm not sure whether this is so much about ali rowghani's sort of relationship with twitter itself and sort of his reputation after selling a bunch of shares. he said in the re/code piece he reported it was to deal with contributions to combat a disease his father suffered from and also a lot of positive buzz around him that might have put him in contention with dick costolo or whether this is about some other things. he had gotten credit over the years for sort of bringing maturity to a management team that historically had been at each other's throats. you really don't want that at a time when they're struggling to find growth. here's a guy who had been partly responsible for a positive relationship with apple, that saw twitter built into iso operating system, wouldn't be surprised if he ends up some place like that after this, but you got to wonder what happens to twitter's management team over the next few months if they bring in new people and how growth gets turbo charged now that they're losing this key executive, whether he was pushed or not. looks like he was pushed. >> john steinburg, are you with us here? do you have any insight into the internal dynamics of the management within twitter and what the problem was specifically? clearly we've listed a laundry list including the fact that the stock is down more than 40% year to date? >> you know, i think it's one of two things. it could be the politics. kara swisher actually had the whole entire thing last night a laundry list of things that had gone on but ultimately there's not growth in the user base and he was responsible for product. ultimately it's either politics or the factors that the site was not growing, engagement was not growing and he hadn't come up with product solutions around that. i think that is more likely the explanation here and maybe the politics sort of pushed it over the edge. >> yeah. it was also mentioned and you mentioned this, the sale of 300,000 shares of stock. putting pressure and who was selling. >> right. the expirational lockup had an incredible impact on the overall stock price, perhaps more than some people had anticipated. you know, i mean, yeah, guys, i don't quite know how to view it here. the stock -- the investors don't seem to be that concerned about it. the fact that he's not being repla replaced, interesting they say he's going to stay as an adviser but his tweet seemed to be a pretty final good-bye to people. >> you know, david, it's interesting. >> yeah. >> there's actually a lot of companies in the fortune 500 where they remove a coo and don't replace a coo and that's not uncommon. i think the growth in product is an issue outside any individual. i assume investors don't think his move moves the needle in one direction or another. that's my take. not someone that wall street talks about a lot i don't think. >> what do you make of the divergence between facebook shares and twitter shares and how investors seem to be voting on these two companies, certainly this year alone? >> well, scott, i think as users you sort of look at facebook and twitter as being similar, but when you take a look the a their numbers and you take a look at their growth trajectory, take a look at their engagement they are very different companies. twitter has a strong brand, it's big. on big events. but when it comes to day-to-day use age, the ability to monetize and grow, facebook is just in a different class. i think that's what's reflected in the shares. also, when you look at management, i mean we know who runs facebook. it's mark zuckerberg and sheryl sandberg, top to bottom. when you look at twitter it has a different kind of management history. people at each other's throats. jack dorsey on the cover of magazines a lot, but he was not always seen internally as the golden child all along. very different company. i think if you're an investor right now, you've got to sit back and think, not just about the product that you see, but about how the current management is able to recruit talent, what they're going to be able to build to put them in that upper echelon of social right now which facebook arguably has all to itself. >> and who's secure right now. adam bain who runs the revenue line, the revenue is good and earnings for the company he's totally secure. you never hear adam bain come up as someone who is controversial. >> we'll see you later. >> kara swisher will be joining squawk alley, came out with a story on re/code last night, played out as she predicted. >> wanted to note you may have heard another bell a cow bell on the background, that was an opening for zhaopin, the stock up 1 13rs looking good in terms of where they priced the latest chinese company to hit our markets. to bob pisani -- say again. >> zhopin. >> i have it to get my pronunciations. >> bob knows how to pronounce a lot of different things. >> i do. the interest four ipos, gopro is getting a lot of attention here. 17.8 million shares, 17 to 24, billion dollars in revenues and profitable. that was interesting. more of the cameras. we've been playing with gopro on the floor to see how it looks. put up with this video. we played with it several months ago, brought a camera down. you can get really wide angle views. when i'm standing here really tight shots of everybody, this is 180 degrees. this is me wearing a gopro on the floor walking around. how wide, it's essentially 180 degrees. they don't just want to sell cameras. they want to be a video company like apple. it's not about the phone it's about itunes. they want to build a media outlet on high energy sports. see if they got that. with a billion in revenues they're moving in the right direction. i went downstairs, jim was talking to some people in the ipo that day for a different ipo. candid shots of people standing there with it on your chest basically. a shot of me walking around with the camera on my chest. it's a pretty simple camera, just a tiny thing, you can strap it on from the side and basically go out and just start talking to virtually anybody. the guys down here love it. all their kids have it and use it on various sports. put up a shot of me, a still of me. the camera is very small. doesn't take up much room at all. bottom line here is, a lot of things going on in the ipo space. let me talk about what's going on today right now, we're heating up, four ipos today. a couple of them in a hot sector. right now, we have right over there, we're waiting for this one to open here, but let me tell you about the chinese one, zhaopin did open, second biggest on-line job board for white collar workers. 13.50, opened at 14.51, opened on the upside. hard to believe but chinese ipos are the hottest sector this year. you think something else like cloud computing but take a look, since the first -- since the priced average chinese ipo in the last year is up 63% from its price. u.s. ipos, u.s.-based ipos up 25%, data supply by renaissance capitals. everybody is worried alibaba will take the air out of the chinese ipo market and it might. that's a warning people have right now. for now that's the hot sector right now. the other hot sector is energy, another one that just priced, nordic american offshore, they supply north sea oil companies, boats, supply equipment. they priced at $16. just opened below the expected range there at $14. but they already priced over in norway. they list on the over the counter market. energy is very hot area and believe it or not by sector everybody thinks got to be health care or something else number one this year, but energy is the hottest ipo sector up 27% from the first day and again this is renaissance, tech which includes the very hot spaces, other spaces, number two, consumer and health care is following behind that. we got a couple other ipos, trinsayo on the new york stock exchange at $19. that's the high end of the talk, 17 to $19. they came out of dow chemical, they sell to tire companies, for example. still waiting for that to open. mobile iron, this is an interesting one, byod, bring your own device company, videos that want to individuals that want to connect to their secure networks can use any device they have to connect securely to their own company's. still waiting for that to open. 8 to $10 the price total will. the dow down 27 points. guys, back to you. >> thanks very much, bob pisani, from stocks to bonds, the bond pits, rick santelli at the cme group in chicago. >> we sit at 2.63, down a basis point. we have seen yields move up a bit and everybody constantly debates why. one good reason, today, we looked at may retail sales. 0.3. just a headline. before that it was 0.5. it was revised. before that 1.5. i think it makes perfect sense that we get a nice glimpse at treasuries still move lower in yield, higher in price, when the data disappoints. especially after all the big bounce we were supposed to hear regarding weather, seems that at least for now, the 1.5 was march, still cold and snowy out there. two-day chart, today's range is under yesterday's range, that's called an inside day. open it up, year to date, we can clearly say we're in an area of congestion, but we do have a slight bias here to higher yields being that we're above 2.60 on a closing basis several sessions in a row. one reason we may see more buying coming in. look at an intraday of our 10s, minus bunds yields. they've sold off a bit as well. if you look at the spread, it reached an intraday level of 126 today meaning if you take a bund yield, you get 2.63 which is our ten-year rate, open the chart up, fresh 15-year wides meaning it's been 15 years since the differential has been that wide. let's look at the euro. seems like all the good action has been after the ecb meeting and if we see a one day or two-day chart we can clearly see deterioration. when you open it up we're basically at the lowest euro versus dollar level since a week before valentine's day, early february. david, back to you. >> thank you, rick santelli. up next, the big money and big investors behind those start-ups on cnbc's upcoming "disrupter 50" list. 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[ male announcer ] with millions of reviews, a visit to tripadvisor makes any destination better. that's keeping you from the healthcare you deserve. at humana, we believe if healthcare changes, if it becomes simpler... if frustration and paperwork decrease... if grandparents get to live at home instead of in a home... the gap begins to close. so let's simplify things. let's close the gap between people and care. ♪ 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 one-on-one review. i like the deejay this morning. cnbc is set to unveil its second annual disruptor 50 list, a look at private companies shake up giants across industries and challenging the status quo. with that list coming out on tuesday today we're looking at the big money and big name investors behind these game changing start-ups. cnbc's julia boar stein joins us live from l.a. hey, julia. >> well the dream of billion glar start-up sales are a draw for investors and 10 of last year's disruptor 50 have been acquired or filed to go public. an overall uptick are luring investors. in the first quarter 36 venture backed ipos the best quarter for new listings since 2000. there were also 105 m&a deals, that's the strongest quarter since 2012 according to the national venture capitalist association. it also says momentum is building in the fourth quarter, venture capital outperformed the dow, the nasdaq, and the s&p 500. those returns inspired more investment in q 1. venture capital firms raised 8. $9 billion, more than double raised in the year earlier quarter. which firms are best positioned to cash in this year? according to research firm cb insights, cliner perk kins has the most portfolio companies to ipo in 2014 followed by new enterprise associates, excel partners, intel and sequoia capital and a landful of big and familiar individuals that continue to cash in on disruptive start-ups. mark an dresen with his partner ben hor wits is behind eight of the starups, pinter, four square, airbnb and brow meium. paypal co-founder peter teal chairman of the board of paltear technologies, one of last year's disrupters which founders fund invested in along with backing airbnb, spacex and zok doc and spotify and backed a number of the contenders for this year's list and then there's celebrity investor ashton kutcher, backed a number of last year's disruptors including uber, four square, spotify, airbnb, and twitter. those three guys clearly have a good eye for disruption and once they establish a track record, they get their pick of investments. david? >> yeah. ashton kutcher, a lot more than just a tv star. >> smart investor. >> he is. spent a little time with him. bright guy. coming up, thank you, julia, a different way to charge your wireless device at starbucks. we'll talk with the ceo of the company behind that technology. could save you fifteen percent or more on car insurance. mmmhmmm...everybody knows that. well, did you know that old macdonald was a really bad speller? your word is...cow. cow. cow. c...o...w... ...e...i...e...i...o. [buzzer] dangnabbit. geico. fifteen minutes could save you...well, you know. we stathat the kid onhe thought the back of the bus might have a song that he has in his head but he just can't get out. with the technology of cloud, we change all that. i can sing something into my device. up to the cloud it goes. back down it comes sounding better. we break down the walls of creation, and we give music creation for the masses. ♪ ♪ oil prices are higher on unrest in iraq. jackie deangelis is at the nymex with more. jackie? >> good morning to you, david. that's exactly right. geopolitics right now really giving these oil prices a leg up. take a look at the brent crude price well over $111 a barrel. that's a 52-week high, a 2% move on the day. and wti is moving in side step as well, over $106. we haven't seen this level since september. traders say expect the volatility to continue. escalating violence in key cities in iraq between sunni militants and iraqi government, which are the shia led government, and, of course, that puts the political stability of the region in question at this point and it also questions what's going to happen to the oil supply there. let's talk about that supply because this was the year that supply was supposed to ramp up. we saw a 35-year peak in production back in february, that was 3.6 million barrels. then the oil ministry saying we could get to 4 million barrels by the end of the year, but now an analysts are saying we could slip back to 3 million barrels, which is a really, really big disconnect there. meantime earlier in the week traders telling me the next leg up for crude was 105.30. we clearly broke through that on the wti price and they're saying if this unrest continues, we could see these prices go up to $112 and remember, nbc news is now confirming that iraq has asked the u.s. for help for potential air strikes here. so this situation very fluid right now. back to you. >> thanks very much, jackie deangelis. >> i was hearing from -- i'm sorry. >> i was going to say the energy sector is strong outperformer in an otherwise red market in terms of groups. >> it has been all year. energy has done well all year long. >> in the first half hour of trading we're seeing new highs for many of these energy companies. if you look there's exxon, marathon and devon energy. devon trading at levels we haven't seen since back in 2011. marathon levels since 2007. conoco phillips at an all-time. >> i forced people really this news out of iraq, to take up the high end of their forecasts this morning because i hear from some energy traders saying you can push the higher, the upper end of their ranges up by 5 to 10 bucks a barrel at least. because no one knows how this is going to settle out and if you're already exploding north of 10 on wti and even higher than that in brent, that's worrisome. >> it is. despite the fact that with each passing day we become more and more energy independent if you will. >> not very -- >> given how much oil we're producing. >> still have a number of years. >> import prices up today about 0.1%. >> in a down week for stocks energy is by far the outperformer. it's up almost 2%. >> right. >> as we have to go. >> that puts me in mind to jim cramer who loves talking about the permian among other things. he is on assignment and will be back tomorrow. watch tonight on "mad money" at 6:00 p.m. twitter's ceo sweep. you can see right there the company's coo said see you later, it's been great. the company itself saying however, he's going to hang around as an advertiser. maybe he -- adviser. >> maybe he hasn't been told. >> i'm surprised. >> that's it. i make a lot of purchases for my business. and i get a lot in return with ink plus from chase. like 50,000 bonus points when i spent $5,000 in the first 3 months after i opened my account. and i earn 5 times the rewards on internet, phone services and at office supply stores. with ink plus i can choose how to redeem my points. travel, gift cards, even cash back. and my rewards points won't expire. so you can make owning a business even more rewarding. ink from chase. so you can. dad: he's our broker. he helps? look after all our money. kid: do you pay him? dad: of course. kid: how much? dad: i don't know exactly. kid: what if you're not happy? does he have to pay you back? dad: nope. kid: why not? dad: it doesn't work that way. kid: why not? vo: are you asking enough questions about the way your wealth is managed? wealth management at charles schwab. in a we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. seeing the world in reverse, and i loved every minute of it. but then you grow up and there's no going back. but it's okay, it's just a new kind of adventure. and really, who wants to look backwards when you can look forward? welcome back to "squawk on the street." breaking news. april business inventories increase 0.6, followed by an increase of 0.4 unrevised. that was the first quarter. april is the first month of the second quarter, so, of course, it has implications as many try to handicap what the second quarter will be. it certainly is looking like a three handle versus a four handle. building inventories is a builder of gdp but the real key is will consumer demand be around to soak up the inventory. simon hobbs, back to you. >> thank you very much. in the meantime at the corporate level the guy in charge of growth at twitter its coo is leaving, so what's behind his split from the company. julia boorstin joins us with answers. it's interesting the stock is not really moved on this. >> that's right. i think that the issue here is that this was not perhaps material for the stock right now. now he is leaving. sources tell me he was effectively pushed out after he and ceo dick costolo had a fundamental disagreement about what the coo role entailed. he's leaving as costolo shifts the company's structure to have more key executives including the head of product and engineering report to him. the strategy is intended to streamline growth of user numbers in particular. with idea that the fewer layers the easier it will be to move things forward. disagreement between costolo and rowghani dated back to april when they hired daniel graph from google and had him report to costolo than rowghani. twitter shares jumped the most since twitter's ipo. also twitter hired a new head of engineering in may, who also reports directly to costolo. there there have been reports that rowghani's sale of $9.5 million worth of his shares of twitter stock rattled management but sources it tell me that this conflict was really about rowghani should be doing and what costolo wanted to take responsibility for himself. now there are no plans to replace rowghani, which is not entirely unusual for a tech company. with the exception of facebook, there are a number of high-profile internet and tech companies including yahoo! and google which do not have chief operating officers. worth noting perhaps why the stock is not moving today, rowghani's departure does not change anything on twitter's revenue side. twitter's head of revenue adam bain reports directly to costolo. and rowghani's not leaving on terrible terms. both costolo and rowghani made a point of tweeting this morning to thank each other sort of sending the message that there's not too much bad blood. back over to you. >> and actually, julia, now twitter shares are trading much higher, up 3% after a 40% slide over the year. thanks for the valuable perspective. julia boors stein. we'll talk later in the hour. a broader look at u.s. stocks right now in retreat for a second day in a row. everyone glued to the price of oil shooting higher on geopolitical concerns. the three major averages all in the red. let's bring in our package here, andrew berkeley, managing director and head of institutional portfolio strategy with oppenheimer and company, jeff clinetop, chief market strategist with lpl financial. oil price, wti at a nine-month high, brent prices higher as well. how much of this is a focal point for stock market investors today and a concern when it comes to geopolitical tensions in a place we haven't talked about in a while? >> it's something to watch. i think the u.s. has made it clear they're not going to get involved in any direct way, so the indirect connection to the markets is one we need to watch through oil prices. oil got back to $113 a barrel, back during the libya conflict. we could see that again, certainly that at the time was one of the reasons we saw a soft spot in the economy, not a recession, but a little bit of a pullback back in early 2011. that is a bit of a concern given that retail gasoline prices started this summer driving season at the same level they were in each of the last two years, yet crude prices are much higher, so we could see a bit more of a burden at the pump. i think consumers can handle it. incomes and jobs are coming back. >> can consumers handle it? the retail sales report for the month of may was disappointing. revisions higher in april, but may given the strength in auto sales was quite a bummer. >> yeah. i think if you back out auto sales, retail sales are basically flat and without autos up about 2.5% for the last 12 months which is certainly not dynamic. you know, continues to show that there's an aggregate demand problem which is why interest rates continue to be relatively modest in here. so i think the energy story is really a sector specific story and one of our favorite ideas this year has been overweight energy and underweight consumer discretionary. >> that's moved out. >> only exaspratss that further. we would stick with that. if you look at bull market cycles historically, energy is a later cycle area we think we're in the later cycle and well positioned here. >> i'm looking at the major losers as we speak. delta airlines down over 5%, southwest down almost 4%. inevitably you could argue there should be a knee-jerk reaction on oil prices but there were fulls in the stock earlier this week, and a suggestion that perhaps they could be the biotech type of momentum stock the airlines have done extremely well over the last two years, and the argument goes investors could exit in the same way they exited other high momentum areas of the market, would you agree with that? >> i think it's possible. you know i think there are areas of transportation that still look very attractive, rails, truckers. the airlines have had tremendous pricing power over the last few years and simon, i think we are possibly reaching the limits of that and so that could be a bit of a risk for that sector. oil prices definitely having an impact there. interestingly, not so much however over in china. those stocks are up. remember china just as much an aggressive energy consumer as the airline stocks are, doesn't seem to be having as much of an impact. >> jeff, overall, when you look at the market, does it feel tired to you or just simply taking a break, sitting down, having a drink, and then waiting for the next catalyst to take off yet again? >> i think -- listen, it's been what, two, three days now. over the last three weeks i think we're up 3 or 4%. just a little bit of a pause here. we're only a month away from the earnings season. the earnings season could be the next catalyst. remember, the earnings season during the last five years has been where almost all of the gains have come from. 94% of this market advanced from the low has come during the six-week earning season. we're only four weeks away from that. getting a pause, consolidation ahead of that could be a healthy thing as we get into what could be a bounceback quarter for profits as others are suggesting. >> and the economy is suggesting for q2 goldman sachs, andrew, put out a note yesterday, they're tracking gdp forecasts for the second quarter is 3.8%. is that going to come down or does that mean we're in for a good earnings period? >> i think earnings will be okay. earnings estimates haven't really drifted down that much this quarter so the bar isn't particularly low. the gdp numbers are going to be a major head ziswing because th revisions keep pushing that number down. the tracking numbers for the second quarter keep pushing that number up. so the swing factor is substantial. just back to simon's point quick in terms of airlines versus biotech and internet. disagree. if you look at the valuations they're not even close. airlines are barely trading at a double digit p/e. 10, 11 times. some of those internet and biotech names were in the, you know, almost triple digit on a valuation basis. not even close. >> all right. thanks, gentlemen, for joining us. andrew and jeff, good to see you as always on the markets. >> okay. we're down 34 points on the dow. let's send it over to dom chu for a market flash. >> down day for stocks overall check out geron shares, stocks soaring, the food and drug administration lifted a hold on the blood cancer drug. it had been stopped on concerns treatment could cause liver damage and those shares up about 25% in the trade. back over to you. >> thank you very much. up next on the program, the ceo of one of grease's three biggest banks in a bank that some of the smart investors here in the united states are buying on the cheap. later, which is worse, the dmv or airline travel. safe to say neither is popular but which ones americans prefer. on that cliffhanger, "squawk on the street" will be right back. . i got more advice than i knew what to do with. what i needed was information i could trust on how to take care of me and my baby. luckily, unitedhealthcare has a simple program that helps moms stay on track with their doctors and get the right care and guidance-before and after the baby is born. simple is good right now. (anncr vo) innovations that work for you. that's health in numbers. unitedhealthcare. bulldog: i can't wait to get to imattress discounters because the tempur-pedic bonus event ends sunday. i'll have first pick from the huge selection of tempur-pedic mattresses. then, i'll get to choose $300 in pillows, sheets, and other free gifts. on top of that, up to 48 months interest-free financing. hurry! mattress discounters' tempur-pedic bonus event ends sunday. mmm, some alarm clock you turned out to be. ♪ mattress discounters now to some of the smart movers in europe. fairfax made billions buying bank of ireland but now they've moved on, and they're buying along with a big name investors controlling stake or a very large stake for $1.7 billion in greece's third largest bank, eurobank and eurobank's ceo christos megalou is with us for an exclusive interview. good morning. >> good morning. >> people will say why invest in greece at the moment, you have deflation at 2%, unemployment almost 28% and the neo nazis with 9% of the popular vote. why would people buy assets in greece now? >> the main reason the market seems to think and looks like all of us feel it, that greece has turned the corner. greece is going to be posting most likely a positive gdp reading this year and the -- and the forecast for next year is even further growth, so we can safely say for a number of reasons, the most important reason is tourism. greece has turned the corner and -- >> what does that mean for your bank? i mean what do you think will happen to the market cap of your bank to the value that these investors have bought? >> all the greek banks are now, of course, eurobank, will reflect the greek economy. the market economic environment in greece is a lot more better than the last few years after a big recession for almost six years and gdp growth of minus 26%. >> yeah. >> we are for the first time posting growth. next year we're going to have positive credit growth as well. >> what about the greek taxpayers? they and the international community spent sen tens of billions to bail out the banks, merged two banks into you and come foreign investors and get control for three or four billion euros. there are people angry about that. why did that happen? why is prem watsa able to pick up these assets so cheaply and why is it fair? >> i wouldn't say cheaply. still it was a valuation in line with european averages when it happened. the most important thing in our case was for the bank to be recapitalized, capitalization of the bank was the main objective when -- >> could it have gone under without their cash? >> capitalization of the bank, the real capital strength was the main objective when the money's in the first place and was the main further objective for this bank being recapitalized. that will have a very, very positive momentum in the greek economy itself and other banks and going to be creating the positive momentum for financing the greek economy. >> do you think that european central bank has done enough? draghi keeps promising the euro remains at 1.35, has enough been done? >> i think what has been done is a hell of a lot. we will see that we will have a very positive effect in financing the european economy. as to greece, already having an effect in lowering the yields of the corporates and in essence creating a unified banking market where they will be moving money and that's only positive for the growth of the system as a whole. >> do you think people will exit greek bonds? they've made so much money? >> look, there is still yield to people that are hungry for yield and you can still get better yield in greece than any where in other parts of the world or southern europe in particular. >> i will be staying in your country flex month for two weeks and i will test out many of those suppositions. christos, nice to meet you. thank you very much. christos megalou, the ceo of euro bank. back to you. >> little jealous, simon, going to greece. >> up next lululemon, the stock absolutely tanking following its quarterly results and outlook a day after its founder and biggest shareholder turned on the company's board. so what is next for this company and for the stock? more on that after the break. oh my god! look. you need to see this. show 'em the curve. ♪ do you know what this means? the greater the curvature, the bigger the difference. [sci-fi tractor beam sound] ...sucked me right in... it's beautiful. gotta admit one thing... ...can't beat the view. ♪ introducing the world's first curved ultra high definition television from samsung. that's keeping you from the healthcare you deserve. at humana, we believe if healthcare changes, if it becomes simpler... if frustration and paperwork decrease... if grandparents get to live at home instead of in a home... the gap begins to close. so let's simplify things. let's close the gap between people and care. ♪ let's close the gap between people and care. being able to pay as we go to is crucial for a start up.deas. having to fork out a lot of money up front was risky. we can launch a feature really quick, and if the feature doesn't work, we haven't lost anything, and we can have something up and running in days. and this would not be possible without the cloud. we are now supporting over 25 million users each month. >> up next lululemon, the stock welcome back to "squawk on the street." u.s. oil prices are hitting a one-year high and now this on worries the escalating tension and violence in iraq could disrupt oil prices and al qaeda splinter group is making rapid advances toward the capital city of baghdad in iraq. right now west texas intermediate on the top part of your screen also in that chart right there, just about $106 per barrel. as for energy related stocks, the big ones, exxon mobil, chevron, several oil services companies like halliburton, schlumberger, baker hughs, all moving higher, green arrows across the board. the higher oil prices impacting the airlines as well. look at american, delta, united, continental, southwest, jetblue, all down between 4 and 6%. right now southwest and delta, sara, among the two worst performers in the entire s&p 500. back over to you guys. >> all right. thanks, dom, for pointing out the ripple effect. speaking of airlines a question for you, which is worse? airline travel or the dmv? that's the question we asked in a cnbc -- >> can there be a tie? >> economic survey. can it be a tie, steve liesman? he has the results at hq. >> who asked that? >> scott wapner. >> he's a spoiler. ever sit in the airport or one of those crowded planes and say to yourself i would raetser be doing -- i don't know walking on a bed of hot coals. would you rat rather be at the dmv or at an airport. a tie. 12% say it's equally bad, 40% say it's worse to be in an airport. 2% within the 3.5% margin of error say that the dmv is worse. we drilled down into this issue of air travel and asked people, is air travel enjoyable, bearable, unenjoyable or awful? you can see the plurality at bearable with only about 25% saying it's enjoyable. this is what's interesting. if you zero in on the unenjoyable and awful, that's 27%, folks. could you imagine a restaurant remaining in business? that 27% of their clients said it's unenjoyable or awful. i think at least in new york city that restaurant would be out of business quickly or any service business at all. where are the problems? here's air travel, the good, the bad and ugly. notice a net favorable minus those who say unfavorable. nothing gets above 70%. flight on time and service do the best. only 31% on service are very positive. schedule convenience okay. here's writ starts to go downhill. security not necessarily in the purview of the airlines themselves, crowded planes, seat size and they really hate those fees. guys, so when it comes to whether or not we can fix this there are obvious areas where the airlines could concentrate. here's the question that a lot of people want to know. airlines making money now, and the -- the flyers are not as satisfied as they used to be. dids they things go in opposition or can we get them both right. the airlines make money and the customers be happy? >> no. >> take advice from your survey. >> no. >> making money is because they're making us unhappy by -- >> as they make -- >> charging for everything. >> as they make more money you find they get happier. that's the dynamic. that dissatisfaction will decrease they can staff them better. >> from your mouth, simon. >> i still think the dmv is the worst experience, worse than air travel. >> i have to tell you, when i told a lot of people about this poll they said the dmv has gotten better because it's automated now. the dmv got higher remarks. >> not my dmv in cincinnati, ohio. >> i thought you were driven everywhere. >> i do drive. it's a hazard. steve, good to see you. thanks for the results of the all-america survey. check out shares of lululemon, getting hammered, hitting a three-year low as we speak after first quarter earnings. did beat estimates a bit but full-year guidance disappointed. the company's cfo announcing he would retire by the end of the fiscal year. courtney reagan has candid details from the analyst call. >> this was an interesting one, sara. on the earnings call, ceo laurent was asked how does it feel right now within the executive ranks when you've got founder chip wilson very publicly saying he voted his shares against two members of the board, the rest of the company supporting them and he said, quote, it's very awkward, it's like our parents are fighting. so it's a very candid comment there from the ceo as the tensions are still pretty high within the executive ranks at lululemon. sara? >> you don't necessarily want to see that. thanks for bringing us the latest from the call. want to bring in dana tellsy, ceo and chief research officer with tellsy advisory group fresh off the call with lululemon asking management questions. you have been a fan of this company and the stock. did today's performance and outlook do anything to change that or are you still a buyer? >> i think overall it's going to tread water for the next six to 12 months. i think one of the things we need to see from lulu is product process redesigned, they are getting the traffic, they did say that to today. the conversion is what's weaker. tara posely's emphasis on getting that core product, putting in the seasonal product is what it's going to be. it has been the company that has been the leader in the active wear space, the yoga space, and soft athletic and now reinvigorating the product that's the key going forward. >> the question is, how quickly can it do that and it's a lot more competitive space that lulu is living in? the stock is down 15% right now, dane ta. >> exactly. that's why it's going to take time. the fact that their first going to new factories and enhancing their whole manufacturing process, positive comps aren't expected until the fourth quarter at the earliest as they're living through product from the old design team. this spending money on traffic driving initiatives in the second quarter to the third quarter but it's a work in progress. it's not the same lulu it was a year ago or two years ago. >> they're kind of getting into the retail danger zone too, dana, right, where inventories are rising quickly and they're staring at a more promotional environment, something this company didn't have to do in the past because people were willing to pay full price for their products? >> i think they're still willing to pay full price. i think the inventory rising we'll have to go through that through this quarter. a lot of inventory increase is in the basic goods but if they're retooling the basics they need to move these items. i think one of the things we're going to see over the next quarter, two quarters, is more activities, more events in the stores, and if they do need to do some special events or deals to move it, i think we're going to see it because they want to keep that traffic. >> more events. like yoga classes in the store. i mean what kind of events? >> they do that. >> they do that already. >> yoga in the window. >> they used to do it up on broadway, a woman would lie on her back and a man on top and -- >> oh, gosh. >> and floats. >> dana, should there be concern about investors for what courtney allowuded to, parental fighting, chip wilson is against the current board even though the chairman was re-elected? >> it's disruptive, of course, when you're having the board talking about one thing, a company undergoing tremendous change in terms of becoming a bigger business and they probably grew faster than their scale. it is disruptive and having that calm down, getting the management team on the same page with the board, is going to be essentialal over the next few months. >> the stock is shedding its value today. would you be a buyer here, step in and buy it? >> i think the stock basically is not going to do much here. if i owned it and if i didn't own it i would stay where i am hold it where i am. i don't think there's upside in the next 12 months. you have to be a long-time buyer to hold lulu right now. >> dana tellsy, thanks for joining us off the lululemon call with an optimistic take. >> a breath of fresh air in commentary. the cfo was leaving because he wanted more of the west coast lifestyle, water, the slopes. >> and yoga. >> republican congressman scott garrett will join us live. hear what he has to say about eric cantor's defeat and pending comments from mr. boehner at the top of the hour. back after a quick break. you've reached the age where you've learned a thing or two. this is the age of knowing what you're made of. so why let erectile dysfunction get in your way? 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>> it's always an exciting time to be in the house of representatives, so yeah. after the elections this week, absolutely. >> let's try to get to all of the stories of the day. i would like to start out with one that seems to be pretty close to your heart and a "wall street journal" story as well, fraudulent government accounting like to put it on the screen, cbo notes under fair value accounting the four student loan programs likely cost 88 billion and the official 63 billion windfall expected from the fha single family mortgage guarantee program is in reality a $30 billion taxpayer fleecing. you know, many people believe that you look at the cbo and you get the exact skinny, whether it's the obama care or some of these programs. >> right. >> when was this changed from fair value accounting in the '90s? >> yeah. i guess something like that. so the cbo, yeah, right, the cbo does it as you and i might say the right way to include the fair value accounting, omb, administration angle is not and that's why we're trying to get them to do what we believe is the right analysis on these things. >> i got you. >> okay. >> when i look at the student loan programs and i look at the fha, what i see are government gets involved in the finance aspects. do you see that as a good thing or not a good thing? >> well, no. okay. at that level no. i would simply say not good at all when the government gets involved with finance for credit availability and the like. when the government ever gets involved with anything they imply to the american public there's something like a free lunch out there and we know in life there is no such thing as a free lunch. the taxpayer is put on the hook. you mentioned fha. fha if they were standing next to me they would say these are money making programs for the taxpayer and government. no way. the cbo tells us that fha loses around $3.5 billion. >> congressman, i have -- i have kids that go to college. i understand how expensive and hard it can be. >> yeah. >> many americans i don't think have a problem with these programs. but i think in order to really make a true judgment, you need the accurate facts. i guess that's where i'm going. don't like snow jobs whether it hurts the economy in the winter or political. >> right. >> for the news of the day, you know, i was watching channels and reading newspapers. >> okay. >> and i'll tell you what, nobody seems to have this figured out. the answer is so easy as to what happened to mr. cantor. >> okay. >> 64,000 total votes, isn't that about right? i think it was the seventh district of virginia. about 64,000 votes. >> yep. >> challenged the second most powerful man in the house of representatives. that's a america, isn't it, congressman? >> well -- >> 64,000 votes, grassroot, the people on the other side of those ballots, affected a change nobody saw coming. the mouse that roared. david goliath, isn't that about as true american gross roothss anxiety we're done with you as you can get? >> yeah. well that's -- that goes to show you elections have consequences. this one certainly had consequences as repercussions as we're living through it this week and yes, the american people have spoken. also tells you that don't rely on your polling any politician that's out there because i think that -- >> it's funny you should bring that up. >> yeah. >> it's a good one. granted maybe the polling dollars were mostly spent by mr. cantor's group and it wasn't on a national scale as scrutinized many elections will be. >> yeah. >> but i guess in the end the one thing i haven't heard from any politicians is, how the long-term conventional wisdoms could be so thrown out the window? you know, any group of voters with an anxiety that follow their constitutional provisions, and go to the polls and do everything they're required to do, could make a huge difference, can't they? >> it can make a huge difference and this also shows that it can make a huge difference even if money is not involved. i forget what the numbers were, 500 -- $5 million to 200,000 or something like that. >> you're going to break harry reid's heart. how money is garnered from unions to businesses after citizens united and under his diagram the more money always wins, not necessarily true, is it? >> they always say all you need to do to solve any problem in america is throw more money at it, whether one of these housing programs or educational programs we've been talking about, the other side of the aisle of the administration says just throw more money at the problem and solve it. the election shows unfortunately for some just throwing more money at the election didn't solve this problem. >> well, congressman, thank you for taking the time. >> sure. >> i'm glad that the house of representatives and the republican party aren't a bunch of bores that just follow the great guy on top's direction without question. that never works out. thanks for taking the time, sara and simon and the gang back to you. >> thank you very much, rick. up next on the program, soccer fans rejoice, the 2014 world cup kicks off this afternoon. up next we'll talk to the commissioner of major league soccer. he's got 22 players in the world cup this year. 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>> well, you know, i love jurgen, think he's doing a great job. i'll go on the record in saying it, i don't think herb brooks told the u.s. hockey team in 1980 they didn't think they could win the gold against russia. i think we got to believe that we can go as far as the final. you got to believe and you got to think that you can stand and toe to toe. we have a tough group and the game here is less mature than it is in argentina, brazil or spain or england but we have great players a good coach, i think we have a good opportunity. i think we can go pretty far. i'm hoping we get out of the group. it's not going to be an easy task but i'm behind our guys. in our office pool i picked the usa to go all the way, man. >> just changing the subject slightly, commissioner. do you share visa and sony and coke concerns over how the 2022 world cup was awarded to qatar? >> i don't feel good about that. president clinton was quoted today talking about how he was so upset, he was our vice chairman, and we were sitting together in zurich when it was awarded to qatar and he went to his hotel room and he smashed a mirror. we were all shocked, frankly. fifa has made their decision. they're going to have to figure out if it's going to be played in the summer or played in the winter. all sorts of stuff going on with investigations. we're following it very closely. i'm not sure writ ends up. >> is the truth -- and i may be wrong in this assertion, not mentioning the ioc in particular, is it the truth that an awful lot of these big sporting events, international world sporting events, try to have some element of democracy and, therefore, include countries in the vote in far flung places are usually have an air of corruption about them? is that fair comment? >> i don't know that i could -- whether i would say that system creates an opportunity for corruption. i do think that the system creates an opportunity where we're not really in a position or the leadership is in a position to make the right decision for the sport or us mately for fifa as an organization. look at what's going on in brazil where they will test a capacity stadium at the opener later today for the first time. there's all sorts of social unrest going on in that country. i'm thinking that it will be one of the biggest tournaments of all time. ratings will be high. attendance will be high. you got to scratch your head and wonder if, in fact, when that decision was made whether that was the right decision. it is a system that's in place, potential for that system change in the years going forward. we're certainly hoping the u.s. gets the world cup in 2026. i think we deserve it. it would be great for the sport. the sxheconomics will be massiv. still the biggest world cup ever is when it took place here in 1994. we deserve the world cup here in the united states. >> want to ask you something about a story that's been in the news this week. the mls expansion hit a road block this week when david beckham's second proposed site in miami was rejected by the miami mayor. what comes next? do you have to look for another city perhaps? >> well this is an interesting one. david has an option to put a team in miami. if he can't get a stadium, that option expires. and not only does miami not get a team, which would be a shame for all those great soccer fans that live in that city and the state of florida, but it will be a shame for david beckham who would not be able to execute his option. this was our second setback in miami. we're scratching our head. we think we have an unbelievable proposal. we're offering to privately finance the entire stadium. you have david beckham who will have a financial partner that will be among the biggest anywhere in the world and somehow we can't seem to convince the politicians down there to provide us with an opportunity to pay for a stadium in their city. if we can't get it done we're not going to miami and i think that will be a shame for the residents in that city. >> commissioner, you guys are not on hold during the world cup, right, over the next month? are mls teams still playing games? >> we're on hold for the next two weeks. we've done that for the last number of years. we want to take a break particularly when all of the fervor is at attention is behind the u.s. team who has three games during this two-week period. we then will come back two weeks later and play during the final stages of the world cup. if the world cup was to come to the united states, which we're hoping it will, we would shut down the league for the entire four weeks or so of the tournament. but it is unusual that unlike any other soccer league in the world, we do play our season in the summer based on weather and inability to play in january and december like they can do in other parts of the world. >> commissioner, thanks so much for coming on. >> it was great. >> wish you the best. >> i enjoy the it. >> don garbar. >> up next on the program, you will have more reason to hang out at starbucks all day. free wireless charging. the chain is teaming up with duracell powermat to roll out wireless phone chargers in starbucks and tevana. the president of powermat will join us after the break with details on the deal and how you can access it. but what if you could see more of what you wanted to know? 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i would. switch to comcast business internet and get the fastest wifi included. comcast business. built for business. from wi-fi to digital payments coffee giant starbucks is trying to bring more than just coffee to its tables. today they're announcing the rollout of the duracell power mat which will wirelessly charge electronics you bring into the store and from today you'll be able to test that out at locations across the country. joining us now is daniel shriver, the president of power mat with whom starbucks is teaming up. good morning. >> good morning to you. >> the power mat, i don't think you've got a power mat with you, but it fits i understand into the desks, around starbucks. is that correct? >> it's exactly right. we've become so dependent on our devices, we rely on them to wake us in the morning, get us to work, keep us in touch with the world, and then at around 12:00 noon they run out of power. so we've never been more dependent but -- >> don't give me a speech, just answer the question. the power mats sit in the desks -- >> absolutely. >> because we don't have much time. >> that's exactly right. >> it's inside the desk. >> it's embedded into the furniture. >> you put one of these on top. what does it charge? laptops in phones? >> yes. so this is a galaxy s5. this is one by at&t. it already has the technology built into the back cover samsung makes. you go to starbucks, place it down on the table as you do today. you're enjoying your latte or your espresso, the phone is recharging while you sit there. >> laptops as well? >> today it's smartphones which is the biggest anxiety driver and tablets as well. >> and what happens if i don't -- what do i have to buy to make it work if i don't already have it in my phone? >> well, increasingly, phones come with it built in. but otherwise, there's a plethora of solutions. so for example, this iconic little ring over here, you could just buy this. these retail for as little as $9, $9.99. you plug it into your device, put it on the table and you're good to go. >> what's the charging speed? >> it's as fast as a cable. >> it is? >> absolutely. so this is really -- slipping into the slipstream of your life. you're just sitting there enjoying your coffee and the device is charging while you're recharging yourself with a refreshment of some kind. >> how much is starbucks paying you to install this? >> it's a great question. starbucks back in 2001 introduced wi-fi, which really revolutionized that whole industry. they're doing it today with wireless power. but the financial terms of the deal with confidential. >> you're not going to disclose them. talk about the growth plans. how long will it take to get them into all of our neighborhood starbucks? >> well, we have some idea because we're rolling out all of silicon valley, the bay area in the coming months, then to major metropolises throughout 2015. within the year you'll see a great deal of presence in starbucks and other place that's will be copying starbucks as well p. and we've also announced some international plans. so europe and asia are on the drawing board as well. >> i'm quite old, so i worry about things. does it use a lot of power? does it get hot? >> no. this is an incredibly efficient technology. the power that you're using today is a 19th century metal to metal. that's the one you should worry about. this is a technology that is 21st century, safe, waterproof. it's fantastic. >> what about people that have pacemakers or have kind of metal implants? if they put them on -- >> you're not that old. >> but i might have an implant. they put them on the desk. are there other health concerns? >> absolutely no health concerns. but it will be interesting one day to recharge those devices as well. >> yes. and the human beings. danlt, it's nice to meet you. daniel schreiber there, the president of powermat. guys, we have some breaking news now out of washington, d.c. eamon javers has those details. eamon? >> scott, that's right. we're getting an announcement now from congressman jeb hensarling from texas. he's saying he's not going to run for republican majority leader to succeed eric cantor who announced yesterday he'll be stepping down. the election will be late last week among house republicans, and this is now shaping up to be a battle between the majority whip, currently kevin mccarthy, and then also the house rules committee chairman pete sessions is running. jeb hensarling was one that a lot of folks were watching, particularly wall street lobbyists because he's the chairman of the house financial services committee, and of course if he had left that committee in order to run for majority leader that would have set off a scramble that would have been closely watched among wall street lobbyists here in town. now hensarling presumably stays in that position. that locks down that race. and now we have what looks like a two-man race for majority leader next week. it's still very unsettled, though. still at least some possibility that one or two more names could get into this race before all is said and done. but jeb hensarling says he's not going to be among them, scott. >> what a scramble it is, eamon, to watch. thanks for bringing us that breaking news. and of course we'll stand by to hear from the house speaker, john boehner, 11:30 a.m. eastern time. we'll have it for you live in "squawk alley." and speaking of "squawk alley," let's send it over now to jon fortt with a look at swhaels coming up from the north side festival in brooklyn. all the hipsters are out, jon. 140 characters or less. >> all right. there's more than that. recodes, cara swisher, decodes, the twitter shake-up, and rent the runway ceo coming up on "squawk alley." don't miss it. ♪ [ girl ] my dad, he makes underwater fans that are powered by the moon. ♪ [ birds squawking ] my dad makes airplane engines that can talk. [ birds squawking ] ♪ my dad makes hospitals you can hold in your hand. ♪ my dad can print amazing things right from his computer. [ whirring ] [ train whistle blows ] my dad makes trains that are friends with trees. [ train whistle blows ] ♪ my dad works at ge. ♪ my dad works at ge. you need to see this. show 'em the curve. ♪ do you know what this means? the greater the curvature, the bigger the difference. [sci-fi tractor beam sound] ...sucked me right in... it's beautiful. gotta admit one thing... ...can't beat the view. ♪ introducing the world's first curved ultra high definition television from samsung. ♪ ♪fame, makes a man take things over♪ ♪fame, lets him loose, hard to swallow♪ ♪fame, puts you there where things are hollow♪ the evolution of luxury continues. the next generation 2015 escalade. ♪fame the major indices, simon, looks like stocks are in retreat second day in a row. the s&p 500 down almost half a percent after yesterday taking its biggest fall in three weeks. the dow down now 65 points. >> super, super low volume. >> low volume. we did see a spike up in the vix but still very low volume, very low volatility and coming off four straight days of record highs. >> do we mention oil? >> oil. that's only a focal point in the session today after some geopolitical concerns in iraq. there's the price of wti. at the highest level since september 2013. yet as you can see elevated. >> you'd really expect to see the yi78 pact more on brent -- >> which is the international. and smen ji stocks, best perform k group of the s&p 500, the energy companies. >> down side. >> back to you. kelly evans with "squawk alley." >> thank you so much. 11:00 a.m. in brooklyn. "squawk alley" is live. ♪ no sleep till ♪ ♪ brooklyn ♪ foot on the pedal ♪ hotter than a boiling kettle joining us this morning, henry blodgett, ceo and editor-in-chief at business insider. as always, with us, kayla towshey and jon fortt who is live at that north side festival in brooklyn. can't wait to hear more about that a little later this hour. but we'll start with changes in the twitter c suite. the company c.o.o. announcing his resignation. joining us now on the cnbc newsline is cara swisher, co-executive editor, she broke the story this morning. and she can give us a fuller sense of what's going on here. >> absolutely. actually i wrote about it last night that it was coming. there's a lot of issues with twitter right now including its stock price which has been in decline. obviously growth issues that wall street's been worried about that's causing the stock's decline. and also product innovation. and this is the guy that was in charge of all that stuff. there was a lot of pressure and for a number of other reasons that just built. and i think they felt that the ceo needed to be much closer to all those things.

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