thanks for joining us today everybody. we'll see you right back here tomorrow. right now it's time for "squawk on the street." good morning and welcome to "squawk on the street," i'm scott wapner with jim cramer live from the new york stock exchange. di va david faber is at 13 d. monitors investor summit -- >> he's active, he's not passive. >> he's very active. he's going to have many live and exclusive interviews today from that event. uptown carl is off today. let's look at futures the day after the dow closed above 18,000 for the first time since july. the 10-year note yield today as well is worth looking at. it is yielding 1.77%. crude oil hanging out above $40

a barrel. up a gain three quarters of one percent. our road map today starts with netflix. shares down big this morning thanks to weak guidance. what ceo reed hastings had to say about the company's earnings. goldman sachs ceo blaming the challenging operator environment for less than stellar earnings. what you need to know from that report coming up. also dig into earnings from dow components johnson & johnson and united health care. let's begin with netflix. shares are falling in the premarket despite quarterly results that beat the street. the company issuing weaker than expected subscriber guidance for the current quarter especially on the international front. meantime ibm out with q 1 results. jim, let's start with netflix. you said last night you expected downgrades to come, low and behold you have seven firms this morning at least cutting their price targets. many reaffirming their positions as buys, but taking their price targets down.

>> you had bob on last night. that was fantastic at 5:00. my problem here when we get these downgrades, the stock can't rally. it's hard to rally intraday because someone is pounding the bit at all times. when things are going well you can sit there and talk about gerard depar duh and how much you like adam sandler and we have terrific content, when things are going badly, frankly, i don't care. and this guide for international, like where do they get that? you know what this was like? you start in preseason you're let's say the washington nationals. >> okay. >> you say, listen, we're going to win a hundred games. and then like one month into the season you say, we're only going to win 60 games. where'd you get that? where'd you get the 100, where did you get the 60? >> if you're the nationals you could be thinking 120. >> the phillies is more than that but then the team last night the flyers team where

they're like booing when a guy goes down like it's a disgrace, i'm feeling the pain of philadelphia. >> i'm afraid to turn this way, i don't want you to crosscheck me in the back. >> that's what i would have to do down 3-1 in the series. the narrative needs to be more about the numbers. i'm seizing, grasping at straws that perhaps the payments, which they said were okay, that international payments are a little bit more rickty. i remember when i thought this was going to be the china breakout quarter, crouching tiger, hidden dragon, get them, no. call red like when they were winning. you can't do the same call when you're not winning. you have to be a little more circumspent -- >> david, sort of jim's point. when everything's going well you focus on all the great shows they have and don't worry about the spend because they're going to build their subscribers. now this morning you start to

talk about some of the headwinds out there, grandfathering on pricing, oh by the way amazon has this new service that's going to eat in there. oh, by the way, they're spending so much. >> yep. you know, scott you start to look at the balance sheet some do and say, all right, they had negative $276 million in fourth quarter free cash flow -- sorry, $261 million excuse me compared to 276 a years ago. they'll need to raise yield in the high yield market in 2016 and 2017, at least they say. so, yeah, you do tend to focus on some of those things. at the same time, jim, 81.5 million members is not exactly a bad platform from which to operate. and conceivably to start to garner free cash flow down the road. >> no, look, that's why i say -- they did some of this themselves. when they picked that three and a half billion down to -- when you take down your numbers that you're going to get international and you don't give us anything and you talk about how they can borrow cheaper than

viacom, what i felt the way i would have done the call if i had to do it is say hbo has a huge number of subscribers and look out, we are catching up. that shows you how big the universe is. i know they said there's still a lot of time people can look at things and just scratch the surface, but they needed to say, look, bear with us. instead of saying we're doing great. a bear with us call would have made me smile, david. instead i'm frowning. >> does that mean that you would be and you should be a seller of the shares? >> no, no. >> rich greenfield is out this morning saying, look, before you sell the shares you got to, you know, think about things, legacy media is the one who should be afraid. >> david, i'm agreeing with greenfield, is that going to hurt my career? >> i don't know, you know, jim, greenfield bagged a bunch of people in this name. didn't he just operate last week? >> that's why i said i'm a little defensive here. but i do think, you know, the world is their oyster still. and i just think when i look at what they're trying to do and

look at what they can do and i look at their pricing, i'm not as worried about amazon. i thought the execution was poor. and i think they can now beat that guide. so on day two i think you can buy it, not day one, day two. >> price targets now, david, anywhere from a low of 108 to 145. you know, depending on which sell side analyst you're focusing on this morning. as we said at least seven have taken their price targets lower. >> right. and, scott, i can kind of hear your guys on "fast money" though already talking about the multiple or the lack thereof. i should say the high multiple. i mean, what is your sense in terms of where people are going to come down as what this thing's worth when it comes to that multiple of earnings for '16 and '17? >> i think you still have, jim -- >> multiple what? >> yeah, right. well, you have a lot of people who look at this stock as one of those, well, if you're in it, i can't touch it here because the valuation is too big. >> there's a market capitalization here. this thing should not go back to 35 billion.

it's got too much going for it. david, we know that hbo is not going to be broken out of time warner. it's just a supposition. but you know hbo is worth more within time warner, but i'm saying will catch hbo eventually. if that's the case i think a $40 billion valuation is not enough given the opportunity worldwide. >> right. and what it represents in an unbundled world, which i think we still have to think about. we talk about it a great deal, but it's not just another provider. it conceivably is the entire provider given all the things they can bring to the table. but, you know what, i mean, it's not just about australia and new zealand which they seem to be blaming for their lack of comps internationally as they head into this quarter. >> the angeo thing was the straw that broke the camel's when they focused on australia and new zealand, i'm like are you

kidding me? wow, where did that come from? why don't you say, listen, the issue is eurasia. >> let's listen to reed hastings and see reed hastings actually on the call last night. >> the only inhibiter in our growth is how great is our service. can we make it so there's never buffering and always starts instantly so the recommendations are incredible and the content is exciting? if we can do all that, we'll continue to grow globally even though hbo or dish or others are also growing. so their growth doesn't take away from us. >> that was really, jim, in response to questions about competition and this new amazon stand alone service and whether that's going to take subscribers away from netflix. >> no, and i thought he answered that great. remember, time warner ended 2014 with 26 million domestic subs, 92 million international subs for -- and sin max, don't underestimate cinemax.

i think that's your benchmarks. and i agree with david that there's a lot more growth here. i just didn't like the reasons why they don't see the international blowout. and the analyst downgrades and price targets are going to weigh on the stock all day. it's just going to weigh on it all day. all day. >> nobody really willing to, you know, stick out there and actually downgrade this stock and their rating on the stock. >> and, david. >> yes. >> one thing you have to give credit for he talks about disney, which i hadn't mentioned since 909, but he talks about disney being frenemy and these things work if you had more subs. if he said we're going to keep our target pretty much here, i would have been focused on the new adam sandler movie, i would have made judgments about paul rud's fundamental of caring. i'm not caring about the fundamentals of caring if you're blaming australia on the problem -- oh, i'm sorry, new

zealand. what's the population of new zealand? >> what's the market cap? >> didn't they make like "the lord of the rings" there. >> they're going to have brad pitt in a movie. >> he's got it. he's in active, not passive mode. >> he's always very active. let's talk about goldman sachs. >> why? >> why? >> why? there's nothing to say. >> that, i doubt, really? with you? i doubt it. >> i mean, there's nothing good to say. the expense control. david, you see the expense control. i mean, no more black horse clearly. >> expense control was strong. they outdid morgan stanley, right? morgan stanley had a 6.2% return on equity. goldman came in at 6.4%, jim. >> i mean, these are like utilities. i mean, maybe they said to hillary, listen, we got to start making more money here. we can't give to you as much as we'd like. the line items, david, did you find a line item that you liked?

>> it wasn't a lot to like in the quarter. however, i don't believe -- yeah, i mean, fick was -- it's not like we haven't seen this story over and over and over again. and yet the bank stocks have actually performed fairly well as you guys both know in part because it wasn't as though anyone was expecting a particularly good quarter from any of these companies. and we didn't get it. >> morgan stanley doesn't have fick, which helped them. but i bet you, david, on the conference call if they talk about march being good, if they say the first ten days of april were good, this stock is going to trade above book value and looking at great situation. so i set the stage with a down beat analysis, but if march was good, this is a bargain. would you agree? david? >> yes. and, listen, i think it's likely that we know the second half of march certainly and march overall was not bad. and april has been fairly good. >> well, then you like the story. >> high yield markets are open, the capital markets -- we're starting to talk about ipos

again, pace of m&a hasn't been incredible, but also on fixed income you're going to see things get better. they can't be much worse than we were in the first two months of the year, jim. so you're right, it will be interesting to see how they characterize the current environment. and it's hard to imagine there's that much downside though you've talked about it either these stocks are going to trade back to book or the market is really telling us that there's something else yet to come here. >> right. i think they're going to trade back to book. i think it's a foot race who trades back to book. if they can keep this compensation and benefits number to be minus 40, and they get a good month of april, we are going to sorely regret that we sold the stock at 157. this is going to be a buy, buy, buy. >> lloyd blankfein talking about multiple headwinds that the company has been facing. analysts are talking about they've been in the eye of the storm. but david makes a good point, jim, in that these stocks lately ever since jamie diamond stepped in and bought j.p. morgan, you

didn't need a flop to get over it stocks were so low going into the quarter. >> i don't see any reason why you would sell a goldman down here below book except for the fact they tend to sell for partners who want to sell. i wouldn't be surprised if partners say we're not going to sell. the expense structure is remarkable. they just need a couple of breaks. i know when you say that the people who don't have those salaries at goldman like who is cramer to say they need breaks, but i look at this company and i think they are ready to roar if they get anything going. as i feel about morgan stanley. and this is a premium in the book. this is not some slack-mo firm. do you think they still are allowed to use uber? do you think they have to hitchhike? >> i don't know. you think they use the subway a lot? it's still the best way. >> 72nd and third or on the west side -- they don't live on the west side. >> they're kind of far over there. >> you know how they own that area, fifth and madison. >> yeah. >> that's a tough subway ride,

but you can always hike a couple of blocks left. >> you can. you can. i mean, listen, when it comes to comp keep in mind as you well know it's always the fourth quarter when they even things out and see how the year's gone. they can't take too much from these quarters in terms of looking how much comp is down. they get everything sort of -- we'll see where the ratio comes in when the year ends. >> so just to button up the point, the banks last week had their best week in a year. >> yes, because they're so cheap. >> and you think this can keep going? >> bank of america, look, was that a great quarter? not necessarily. the stock's headed to the $16, but morgan stanley on the call, i mean, i felt like telling, gorman, listen, cheer up. it's not that bad. it will get better. come on, james. i feel that way. >> their profits were down 50%. >> well, they won't have to pay any taxes even under the bernie sanders plan. >> yeah. >> what do they have to do 105% if you do well in m&a, david? >> no, it's the financial transactions tax you're going to have to worry about.

you think there was no capital markets activity in the first two months of the year? bernie sanders administration you're paying 50 basis points on every single stock trade, 15 on every bond trade. you're not going to have any volume. that's going to be very interesting to see how wall street reacts on that. >> i was filled in there's about 4.5 million people in new zealand. those capital markets will do better than our capital markets if bernie sanders is elected. which is just a statement. >> went an wiki on us real quick. >> 4.5 million, obviously that hurt netflix, but remember when jamie diamond said they don't make the banks into utility? david, once again, i reiterate, their market electric power would kill goldman sachs in a claymation death match. >> much prefer utilities to those that would become them. >> david, you have a big day coming up. tell us what you have on tap from the conference? >> yeah, we're going to delve

back into activism which has been somewhat quietly. first up is jeff smith, yahoo's reporting after the bell. as you know he's going after the entire board of directors there. also going to be joined by ed garden, talk to him about their recent investments. ge being still the largest single one in their portfolio even though they sold a bit lately, and later on keith meister, board members of williams, although unclear whether he'll talk about them. and friendly activist, clifton robins from blue harbor will join us as well. we're going to try to cover all the bases of activism. >> we have to go right to a thing, but i will point out that the state of alabama has 4.8 million people. so how did they do versus new zealand? that may be another netflix issue. just trying to get that 4 million problem settled. >> we're going to take a quick break. also ahead more of today's movers including a pair of dow components that could help keep the blue chip rally moving.

more "squawk on the street" live from the new york stock exchange when we come back. trolling for a gig with braindrone? can't blame you. it's a drone you control with your brain, which controls your thumbs, which control this joystick. no, i'm actually over at the ge booth. we're creating the operating system for industry. it's called predix. it's gonna change the way the world works. ok, i'm telling my brain to tell the drone to get you a copy of my resume. umm, maybe keep your hands on the controller. look out!! ohhhhhhhhhh... you know what, i'm just gonna email it to you. yeah that's probably safer.

ok, cool.

we're back on seahawks.

headline beat, everything else not so much. stock down 3% in the market. what's your read on the way this thing traded and the way earnings came out? you said you have this thing down? >> thank you. it's a battle for the soul of the stock. okay. and the battle is from tony. >> he nailed it. >> he nailed it early on in the early rounds. he's in control in the early rounds. >> he hit the first pitch over the fence. >> he bryce harpered me. katie comes back the other side. she at morgan stanley tells a better story. i bet if you got her here toward

watson, she would be loving watson. this is a battle between the old and new. at 144 i go with katie. >> so it was a headline beat. they had some tax advantage. they only reaffirm their guidance and the stock's up. >> huge drag, 3:00 in the morning, all that nonsense, and tony says they're going to miss the second quarter by a number that is so big. when i check the consensus, i didn't get the same consensus. i happen to love tony. tony's smart. >> tony's on the halftime show today about ibm. >> he's the best there is. >> i was going to say, tony -- >> are you doing the five? >> yeah. >> so why don't you put katie on the five. this is how booking is done. this is the anthony bourdain. you put anthony on the five, play her on the 12 and i'll do

"mad money." i'll be like the dessert. >> hubert, are you listening? we're back right after this. thank you. imagine if the things you bought every day earned you miles to get to the places you really want to go. with the united mileageplus explorer card, you'll get a free checked bag, 2 united club passes... priority boarding... and 30,000 bonus miles. everything you need for an unforgettable vacation. the united mileageplus explorer card. imagine where it will take you.

♪ i could get used to this. now you can, with the luxuriously transformed 2016 lexus es and es hybrid. ♪

all right. minutes before the opening bell. time now for cramer's mad dash ahead of the market open. and you love j & j today. >> usually don't talk about a company with more than 100,000 people, great balance sheet as having mojo. they came in jacked to the quarter and they have mojo. i count ten potential drugs of $1 billion in the pipe. this worldwide pharma, i mean

sales up 12.3 when you break it out. thank you very much you get 50% for doing not as much because it was sold. scott, it's unbelievable. beating -- >> they raised full year outlook. >> now, here's where we get into valuation issues. it's like pepsico. pepsico did a great number, jnj a great number, if they looked at the dollar going down, it would be great. but this is a market that tends to like banks and cyclicals. so this is the battleground, because this stock you should pay more for. this is the battleground. will they turn on jnj? because, yeah, we know it's good. tell me something we don't know. >> maybe we didn't know that all three divisions are that good. >> medical devices coming back. >> medical devices, consumer products. >> they got tylenol -- remember, no one's ever come back from that kind of fda head slam that they got. they've come back. tylenol's good. medical device i was glad to see

that up 2.2%, roughly flat overseas. consumer very nice, but is it enough? if a guy is getting as all the time and then comes in with an a, do we pay up for that a? >> we start to get complacent with the good grades. >> could happen. i think the stock could go higher, but i totally understand this notion of, hey, tell me something i don't know. give me a bad drug company. >> all right. >> just putting it out there. but so far star of the earnings season, star. reed hastings not the star. >> there haven't been that many. >> well, jamie was a bit of a star. jamie diamond. he was. he was a star. >> yeah, but tell me something i don't know to your point. >> exactly. opening bell minutes away. we're back after this. you shouldn't have to go far

to get the help you're looking for. that's why at xfinity we're opening up more stores closer to you. where you can use all of our latest products and technology. and find out how to get the most out of your service. so when you get home, all you have to do is enjoy it. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around.

we shouldn't sweatlife, the small stuff. but when you're building a mercedes-benz, there really is no small stuff. every decision... every component... is an integral part of what makes the 2016 c-class one of our most sophisticated cars ever. because when you're setting a new benchmark for refinement, it is the small stuff... that makes the biggest impression. the 2016 c-class. see your authorized dealer for exceptional offers through mercedes-benz financial services.

we're back. you're watching cnbc "squawk on the street" live from the financial capital of the world where the opening bell is set to ring in about 30 seconds. you called this a rolling bull market. >> yes. because when you see numbers --

let's look at the bank of america situation. okay. bank of america if i had to do that call over, because i like to orchestrate calls, i would have talked about how mobile adoption was fueling growth. you've got a growth stock buried within a deep cyclical. $2 below book value, that kind of thing can catch up to a jnj. let's watch jnj closely because that was priced -- priced for perfection, can they continue to climb? look at alcoa, remember everyone hated alcoa? where is it? it's 50 cent a barrel. caterpillar is now up so big. >> you made the point that the stocks carrying this are the ones that everybody hated. >> exxon and chevron are killing it, man. what is that about? >> you obviously are watching the opening bells here. let me show you at the big board. social media's etf celebrating

its opening today. and hosting delegates from norwegian countries. and the dow closes above 18,000 for the first time since july. >> what's the second best performing stock this year in the dow? >> i don't know. >> walmart. >> i know what the worst is. goldman. >> oh, geez. how about 3m being the third best? exxon and chevron are driving us, oil companies. companies that have been down and out in 2015 are powering 2016. goldman was not that good in 2015, maybe it plays catchup. i need to be on that call. i'm not going to say goldman's a sell here. no way. not with gary, not with lloyd blankfein. maybe that building was too

nice. maybe they should take something in brooklyn, move to queens. >> speaking of queens, david, ibm's down -- [ laughter ] ibm's down 4% off the open. love your thoughts on this one. >> you know, listen, i mean, scott, as you well know and jim and i have talked about many times, the question with ibm is how quickly can these strategic priorities and their businesses focused on grow to outpace lack of growth in the rest of the business? we're talking cloud, analytics, engagement up 17% when you adjust for currency, is that quick enough to outpace the declines, otherwise and can they point enough people to it to get them excited enough about it so that you feel as though there is a growth story within ibm that will eventually come to the floor. i don't know the answer. jim, i'll go to you. do you know the answer? >> look, they said they were hoping to get those fast growth businesses cognitive. you know, artificial intelligence, a.i., not iverson.

that was incredible up 37%, if you look at what watson's doing, medtron medtronic, you're able to find out if someone has diabetes ahead of time. that's terrific. i look at watson, remember -- jnj going to combine to help predict patient outcomes. they have 80,000 developers building solutions on watson. i'm not thinking the weather is that bad. handle 26 billion inquiries regarding weather. so the fast growing part is kind of exciting to me. the -- but you'll know on the 12:00 today, on "halftime report," i would not buy this stock ahead of when tony is on your show. if you want to buy ibm, wait until after the "halftime report." watch and see if you still feel good about it. because tony could put the wood to it. he could back check that. he has the ability because he's number one. so your show is going to

determine the direction of ibm, not anything we say here. >> no, i don't know about that. >> no, i am willing to say it. you're a humble guy. i'm not. your show is going to determine the direction of ibm. >> all right. >> don't buy ibm. >> well, thank you. >> i could tell bob peck was a little down last night about netflix, because he knew all the price targets have to come down. when peck says now, now. katie, if you book her on the other half, you get the other side, ibm goes up tomorrow. >> you put the booking out already, so we're waiting to hear back. hopefully she's watching. >> how about illumina down 38. >> let's talk about that. a very weak guide, and the stock -- >> horrible. >> -- is just getting annihilated. >> i'm telling you thermofisher is crushing them. this is like they went into the legion of boom and they were the new orleans saints. remember that game? >> uh-huh. >> there they run into 12 men in every field, this was a terrible quarter for illumina.

they make medical devices, they should have done much better. i don't know what that was about. they had their pants down -- that's probably wrong. they weren't ready. >> the stock is down 21%. >> the flyers so far really not even with the caps. >> i've noticed that. >> thermofisher is the caps -- do you know how the warriors can win without curry? thermofisher can win without curry against these guys. just saying it, putting it out there so people have the plan. >> i like that. what about the space in general? health care, biotech, does this now cast appall over -- >> that's not what we're looking a. we're looking at deep cyclicals and we're looking at banks. that's where the action is. i mean, i saw someone downgrade freeport today, the stock isn't even down. >> it's up more than 3%. >> i know. took them -- outright sell.

says copper is no good because of china, oil and gas prices -- and the stock is up. can you imagine take it to a ic >> i have so many people i have to book now. >> he's probably up last bit -- >> wife the halftime slate clean. we are rebooking the show as we speak. >> why not? >> freeport's on a downgrade, do you think nuclear sell it would be a 12. >> i know. >> he's not even awake yet, jim. carl is not awake. >> he's like the treasury secretary -- >> that's a fair point. >> it's true. one of his key guys is here. i was talking to. but we won't go into that. he's not going to join me for an interview. but carl's not in. oils, gas and energy as you point out have not been the best place for him though he's a long-term investor, it's all his own capital so he can have the time and patience perhaps to wait for significant rebound. of course we've already seen it. if he bought a lot more at 350

on fcx maybe you're doing pretty well. i don't know how many people actually bought that stock when it was in freefall. >> freeport could sell 100 million shares $9.78, give goldman that quarter i'm looking for and i think that stock goes higher on that. just like ensco did. david, i'm seeing drug stocks and tech stocks not doing well. i continue to see the bank stocks doing well. and that's all this major shift in stuff that has not done -- >> value over growth. >> you said it better than i did. when is goldman going to be up? it's only down a dollar now. >> well, listen, we'll see. to your point earlier, jim, is it going to trade back towards book. while we're on the subject of energy, guys, i did want to mention this ongoing saga that i've been following between ete and williams. late yesterday you had ete's tax

council come out and say, and this is something we've hardly ever seen, that we're not going to issue an opinion saying that this exchange meets the desired or the needs under section 721 of tax code. it gets somewhat complex. some of the keys here though you have to keep in mind though are we still don't know why. the reasons have not been shared with us from ete's attorney. this came in a filing very late yesterday. of course did have the impact of sending the spread very much wider. ete shares went up and williams shares went down. in speaking to people close to the william side i can tell you they believe latham and watkins, lack of opinion, which by the way is a condition of the merger agreement, they need this tax agreement, they believe it's completely without merit. they point out if there was merit to this argument it would have come up weeks ago in their talks. and this comes back to the bigger point, jim, which is k

kelsey warren trying to do anything he possibly can do of getting out of this deal. that may be doing a preferred for just insiders which he's being sued in delaware to rescind by his merger also being sued in texas by williams. it may be in any number of things that he's doing including perhaps putting pressure on latham and watkins not to issue an opinion. >> wow. >> there's shock frankly among some people saying what is really going on here. will williams be forced to go to court to enforce the merger agreement? that may ultimately be what it comes down to. some believe he may come down to get this -- in other words pay them something. but with each thing he does he's trying to keep that price as low as possible, it would seem. the william side seems pretty dug in to say we want to do this deal.

and we're going to go to court to enforce every right we have to do it. >> but how about what kelsey's done here during this period. ete has gone up, it's doubled. energy transfer partners is up again today, 34. this thing was down to 20. while he has been fighting this battle, david, these stocks have gone up dramatically. he may have a chance to issue equity etp if he wants to. etp i think he can't afford to cut distribution after you saw cal -- but he's giving himself a break. not unlike the countries that talked up before the doha, this may be working for him. >> he has four looked not particularly good and some wonder how bad things really are there, jim. >> that's true. >> but we'll keep following this, the spread is going to react to any new reporting on this, but it would appear these guys may have yet another court date in their future. we'll see. we'll see.

there's more reporting to be done. so i'm actually going to go do that because there's some people here who might be worth my talking to. >> just to reinforce that, david, before you do that you have keith meister on today. >> that's true. he's a board member of course as you well know. he's governed by confidentiality. unclear what if anything he's going to want to say, scott, but certainly we have to at least try and address some of what's gone on here. truly unique circumstances, ones we have rarely if ever seen between two merger partners. >> no doubt. we'll be looking out for that interview. david, thanks. bob pisani is on the floor of the new york stock exchange with a little more on what's moving this morning. >> good morning, guys. important thing is we're modestly positive. take a look at the sectors. once again we talk about a positive narrative for energy and material stocks overall. they're leading the market, take a look, materials, energy, industrials and financials all on the upside. oil is up a little bit. that's helping. and we got some nice moves up in a couple of stocks here. let me just show you johnson & johnson, which remember we're talking historic high on

terrific guidance, there is their guidance by about a dime, not insignificant for johnson & johnson, i'm talking full year guidance. devon energy raised by morgan stanley, energy has been a real leadership group. we had a nice night in japan. nikkei was up on the weaker yen. i want to talk about something that's got the street going about why we may be moving towards new highs. part of this has to do with a narrative change. that the profit recession may be ending. you all know about this profit recession, four consecutive quarters of negative earnings growth including q-1 which right now the estimates are down 9%. but things are changing a little bit. we don't talk about q-1 as much. we look ahead, the street looks ahead, they're talking about q-2 and the rest of the year. right now q-2 earnings almost down 3%. that's been steady. that's a little bit different. normally the street will beat by about three percentage points. if this holds up, we have a very good shot at being positive,

very small positive for q-2. that's a change in the narrative. that would be an end to the profits recession. okay, it's not calls for a party that were just flat but certainly a change in the narrative. q3 and q4 are up, the point is the street's looking for a slight change in the narrative overall. remember what happened to the banks, scott? we're talking about the banks stocks. last week on earnings that were just a little bit better than expected, loan growth a little better, flat net interest margin, banks rallied 5% or 6%, best week they've had in a long, long time. there's the bank index, you see what happened there. now the hope is, this is the bull argument, that the industrials are going to do the same thing, hopefully that's the bull argument here. so we're going to get illinois tool works on wednesday, we'll get caterpillar and general electric on friday. it's the same story. if the narrative is just slightly more positive than expected or even less bad, it could propel the industrials higher. we've seen nice moves up in a number of these names.

double digits in caterpillar, illinois works and honeywell, already ge flat this year on hopes things would be moving. meantime, look at the leadership board this month. i'm picking some of the dow. drug stocks have done pretty well, surprisingly strong after a weak first quarter. financials like jpmorgan have been strong. so remember, and it's important to remember why we've rallied in the last two months. what has propelled the markets forward? there's four major factors, reductions in volatility four areas, number one, fed dovishness put a floor under the market, number two is weaker dollar, number three is oil off the lows and number four is china quieter. the missing ingredient has been the earnings picture. so the markets believe at this point that maybe the earnings estimates have been cut too much at this point. maybe 9% is a little bit too aggressive. and we can do a little bit better than that. i know it doesn't sound like a big cause for a celebration,

guys, but flat earnings would be a change in the narrative. and that's a factor. remember, we are 300 points from the new high in the dow, slightly positive commentary on the earnings would be a reason to put us into historic highs. back to you. >> very well, bob. flat may be the new up. >> goldman sachs up, see. >> jnj up. jnj up almost 2% now. >> this is a good sign. bob is right. the narrative is changing. look at this goldman. >> goldman's up three quarter of 1%. >> you can't sell goldman its book. you don't sell goldman below book. what is this with valet? iron's up. people are buying the deeps, but they're not selling the jnjs. they are selling some -- >> the other interesting thing and importantly that the dollar index as bob was talking about is lower, and the yen, which everybody was having a fit about is also come back over the last couple days too easing a little

bit of those concerns as well. >> yeah, you're just seeing, you know, guys are not providing on the currency, they're not saying -- that was something hugh johnston talked about yesterday on that excellent pepsico call. but we have to focus on what he said. narrative is changing, united technology is up 26 points where honeywell trying to buy it on a hostile. it says people want that group. and they don't seem deterred -- watch illinois tool works. >> that narrative has changed over the last two months. rick santelli at the bond pits at the cme group in chicago has a narrative of his own to watch and talk about today. >> absolutely. thanks, judge. you know, fixed income markets, especially the sovereigns whether you're looking at the bunds or the treasuries, the really in ranges a very compressed range, much of that range has been established for years, weak economic output around the globe. much less domestic, but we keep bucking up against it.

if you look at a one-week chart of tens you'll see what i mean. let's keep an eye on exactly how the bigger picture looks. let's open the chart up to march 1st. not a lot of action, but notice the pattern. now let's go to the bunds, which i mentioned earlier. even though they're only trading around 17, 18 basis points right now, if you look at their march 1st chart, the pattern's a little more aggressive to the upside. remember the ecb meets thursday. these are should we close here would actually be the highest yield close since march 28th, but scott's right. it is all about not only central banks but currencies. remember, if you're looking at a currency interest rate differential, you need to look at the rates minus 12 basis points. abeconomics, i'm not sure if it's working but showing up in their ten-year. new historic yield there.

it just doesn't look good to the dollar. if you open to a three-year chart there is just a boat load of support. it's like looking down a cliff. will it punch through or hold? it's held many times but the euro is strengthening a bit. and scott's right, the dollar/yen is making a comeback in favor of the dollar. remember, next week is the bank of japan and our central bank. scott, back to you. >> all right. rick santelli, thanks so much. coming up, di vaavid faber' live exclusive interview with starboard's ceo jeff smith. we'll be right back. unlimited data from at&t means you can stream it all. like that anthony michael hall movie where he fights with the girl. the one where he gets rejected by the girl. even stream the one where he creates the girl. with unlimited data, you can stream all the anthony michael hall movies you want.

i wonder what he's up to these days maybe he's shopping in an at&t store? get unlimited data and your fourth line free when you have at&t wireless and directv. plus, up to $650 in credits to help you switch.

we're back. more trouble for theranos. theranos says the justice department has requested documents and that the s.e.c. is also investigating. ceo elizabeth holmes was on the "today" show yesterday defending herself. she was also on "mad money" with jim back in october responding to the original scathing report

from "the wall street journal." take a listen. >> this is what happens when you work to change things. and first they think you're crazy, then they fight you. and then all of a sudden you change the world. i have to say i personally was shocked to see that the journal would publish something like this when we had sent them over a thousand pages of documentation demonstrating that the statements in their piece were false. >> okay. so if she was shocked then at "the wall street journal" report, wonder what she's thinking about now with this criminal probe. >> little advice here, free advice from someone who went to law school, justice department, we don't want to know -- don't tell us what you're thinking. once the justice department is involved, if they indeed are, that should really -- you should stop with the -- it's ill advised to continue to talk about your situations. my suggestion. >> other people obviously -- >> you need a peer review.

you need medicare -- i mean, there are a lot of companies in this space and they want to get the nod of other doctors, they prefer to have medicare on their side. these are things that do matter. and she was a rebel. that's great. but right now she's looking very causeless, so to speak. she's looking a lot like james dean. >> she was called the next steve jobs. the company had a $9 billion valuation. >> she's no steve jobs. that's a reference to -- >> i know what that is. >> but i think, you know, you got to be careful. now that the justice department's involved -- >> that was lloyd benson who said that, right? >> yes, it was. you don't want to give a lot of interviews. justice department tend to watch and take what you say down. you want to go kind of in a "law & order" mode. >> we'll be right back. stop trading with jim is next. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday.

jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade. (patrick 2) pretty great.ke to be the boss of you? (patrick 1) how about a 10% raise? (patrick 2) how about 20? (patrick 1) how about done? (patrick 2) that's the kind of control i like... ...and that's what they give me at national car rental. i can choose any car in the aisle i want- without having to ask anyone. who better to be the boss of you... (patrick 1)than me. i mean, you...us. (vo) go national. go like a pro. the e-class has driver-assist systems. it recognizes pedestrians and alerts you. warns you about incoming cross-traffic.

cameras and radar detect dangers you don't. and it can even stop by itself. so in this crash test, one thing's missing: a crash. the 2016 e-class. now receive up to a $3,000 spring bonus on the e350 sport sedan. man 1: i came as fast as i man 2: this isn't public yet. man 1: what isn't? man 2: we've been attacked. man 1: the network? man 2: shhhh. man 1: when did this happen? man 2: over the last six months. man 1: how did we miss it? man 2: we caught it, just not in time. man 1: who? how? man 2: not sure, probably off-shore, foreign, pros. man 1: what did they get? man 2: what didn't they get. man 1: i need to call mike... man 2: don't use your phone. it's not just security, it's defense. bae systems.

great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. okay. it's time now for cramer and stop trading. what are we looking at first? >> katie's firm, put her on. morgan stanley does a hold to sell on e-bay. talking about europe basically falling off a cliff. big decline in consumers, amazon prime hurting them. >> wow, fell 3.5%. >> okay. here's a little quiz.

what oil stock is making a major comeback since it reported? >> i know the answer. it's cheating. >> wells fargo. wells fargo is totally affiliated with oil suddenly because oil won't go down wells fargo is now above where it was when it reported that quarter. >> wells is like associated with housing and now it's a big oil play. >> all the oil stocks, everyone was -- all the wise guys they were all short the oils. they were all short the oils. so this is the rebellion against the shorts. >> wells is up. >> wells is up. look at goldman. we were right about goldman or were we right about goldman? i said don't sell goldman. gary, are you going to sell gary? you an idiot? you go to college to get stupid? >> johnson & johnson up 2.5%. when we were standing at the tell straighter it was up a half a percent. >> don't bet against west point. don't bet against tony because he is on your show at 12:00.

>> perfect segue. what's on your show at 6:00 eastern? "mad money." >> i've got some explosive stuff on the entertainment and cable play including what we talked today and off the tape situation. i'm going to be watching you because i want to see this match between katie and tony. and maybe katie's just an empty chair in the end. watch deere, deere is up even though -- >> if katie doesn't show up, we'll do the thing on pti where you print the face out and hold it up and make the argument. >> i love that. i love that. >> okay. we'll do that. >> what a great idea. we'll see those guys at the correspondent dinner. i love them. i know they're on another network, but i love them. >> have a great night. it's been fun. david's interview with jeff smith is coming up on the other side. those new glasses?

they are. do i look smarter? yeah, a little. you're making money now, are you investing? well, i've been doing some research. let me introduce you to our broker. how much does he charge? i don't know. okay. uh, do you get your fees back if you're not happy? (dad laughs) wow, you're laughing. that's not the way the world works. well, the world's changing. are you asking enough questions

about the way your wealth is managed? wealth management, at charles schwab.

good morning and welcome back to "squawk on the street." i'm simon hobbs with sarah and david faber. david will speak with

starboard's jeff smith, keith meister. stocks hanging onto this week's surge taken us to fresh highs for the year. the dow advancing further above 18,000 despite ibm falling 5% on earnings. oil extending gaining above $40 a barrel. commodities doing well in general today, silver up 4%. >> our road map begins with netflix. shares are plunging right now after the company report reveals a slowdown in futures subscriber growth. >> goldman sachs quarterly earnings tumbling. ceo told investors he saw challenges across virtually every one of the businesses. >> and it's primary day in new york. a lot at stake as voting is underway in the empire state. we'll begin with netflix, that stock is getting hammered. netflix giving weak guidance going forward during their earnings call as competitor amazon announces its own stand alone streaming video service

for a dollar less than netflix is. here's what ceo reed hastings had to say on the call about competition yesterday. >> hulu is doing some great work. amazon is, hbo, showtime. there are so many competitors. and everyone is working hard to build the best content. and so we're seeing growth in the overall internet tv market. of course that's displacing linear tv. and it's natural that everybody's coming in as they realize that the future is internet tv. >> neil is an analyst, one of many this morning that cut their price target from 120 to 109. neil, good to see you. thanks for joining us. >> thanks for having me. >> so this question about international subscribers, does it raise some serious down the road questions about just how large and how fast netflix can grow? >> no. i think the issue for us is at

least over the next couple quarters there's going to be a lot of volatility on the international side. we haven't really seen great traction in a lot of the new emerging markets that they've entered like japan, south korea, india, russia. so from our perspective you're going to have some tougher compares and still going to be a long time before i think they really get traction in these non-english speaking countries. >> that's what the company chalked it up to a tough comp with australia and new zealand launching the year before. didn't they just launch in 130 countries? shouldn't that be more than enough to offset the launch? >> exactly. that was our concern as well. you know, you've launched into a lot of these other countries, but i don't think they've really gained a lot of traction. a lot of these countries, english-based content doesn't work well. they need to come in with a good local content strategy. so far we haven't seen that. >> with us now is also tony

weibel, analyst at drexel hamilt hamilton. tony, you got a buy but did take the rating down from 150 to 120. we were talking to neil about the concerns around the international subscriber growth. how worried are you about what netflix forecast last night? >> not terribly worried. in fact, i think the focus is misplaced. i think this is a story about price elasticity. can they raise prices in the u.s., frankly whether they beat by a million subs or not that's realtively insignificant to what they can raise price by buck. and you have to remember what's happening inside tv. and i think cord cutting is only going to increase people's ability to pay by a dollar or more a month. >> i guess, tony, the question is whether we think about this as international players or not. you know, when they launch house of cards, they got a unique position three years ago in this country. culturally. and if you look now they're almost maximum penetration 47

million homes, or 47 million subscribers. internationally not only in many countries is it just available in english, you've got to have an international credit card. and when you look at 34 million subscribers in 130 countries, that doesn't look like world domination, does it? >> let's think about hbo as a proxy. a lot of english language content. about 40 million u.s. subs and 80 million abroad. that gives you 100 million international. i think what the company's basically saying is it's going to take a little longer to get to that total addressable market. i think the missake is when you put a multiple on a story that needs to have a dcf associated with it. i think one of the things people may be missing is the massive stepup in content spend -- >> guys, we have -- >> -- for the international player. >> want to leave this conversation for a moment and take you live to new york city. central synagogue where donald trump is voting in today's new york primary.

no doubt will be casting a vote for himself. but remember his children didn't make the registration in time to register as republicans, so they will not be voting. he's been campaigning. he's way ahead in the polls of course here in new york. primary day. the question will be, can he secure all of the delegates as he's been chasing them, what kind of majority will he get? >> tony, just to come back to the conversation. we'll return to donald trump and today's primaries importantly later. just to come back to what you were saying about netflix and its ability to break internationally like hbo is. hbo clearly has "game of thrones," are you therefore suggesting netflix in terms of content just needs one big win that works internationally and you can create billions of dollars of value? >> exactly. when you think about guys that create ideas, really good ideas, they want money and they want critical acclaim. netflix is going to be spending more on content than any other platform on the planet. you know, i think they're actually going to exceed $8 billion of cash spend by 2018. you know, the accrual spend might be closer to $6 billion, but when you think about that

they get a lot of shots on goal to get that next "game of thrones." meanwhile traditional media has to scrounge to find new sources of money to pay for this. >> so, finally, bottom line, neil, walk us through your valuation. i mentioned you lowered your target to 109. how do you value the stock? it's always a question with these momentum high fliers, especially if there are questions now about whether how much they're spending what is it $5 billion this year, is getting generated in terms of subscriber growth to compensate for that? >> yeah. yeah. absolutely. so we use sum of parts valuation, we put a 28 multiple on u.s. earnings, a 5 multiple on the international revenue and then we put a about a 4 multiple on the domestic dvd business. that's what gets us to about our 109 price target. >> and very quickly last word to you, tony, on your $120 price target? >> yeah, i think it's a big mistake to put a multiple on near-term earnings. when you run a dcf the biggest

mistake is put a multiple when losing money up front. obviously sirius came out of the other side of this being able to grow net additions, grow pricing leverage. for what we do look at netflix five to ten years down the line and discount that back. we frankly used it for probabilities in different scenarios. >> well, the stock right now is at 95.81 down 11.6%. gentlemen, good to talk to you both. tony wibel and neil hoshi. thank you. goldman sachs reporting earnings this morning and the numbers were not pretty. mary thompson is back at hq with more on that, though having said all the headlines, mary, the stock's not doing badly. >> no, i think this was pretty much well known, especially given the reports we've seen over the last week. no one was expecting a good quarter. in fact, it was a very tough first quarter as goldman's net income dropped 60%. the firm managing to beat wall street earnings held by a

slightly lower tax rate and holding the line on costs. quarter operating expenses fell 29%, noncompensation expenses hit lowest level since the second quarter of 2009. now, on the conference call that's currently ongoing, cfo harvey schwartz repeatedly calling the quarter challenging, noting goldman faced significant headwinds in all of its businesses. >> the first quarter was obviously a difficult period for our clients, the markets and our opportunity set. while clearly we don't control the opportunity set, we proactively took action in key areas that we do control, our cost structure and our capital. >> as for the current environment, schwartz saying the markets still feel a little bit fragile though a lot of the factors that impacted the markets negatively in the first quarter appear to have abated. earnings of $2.62 a share, 20 cents better than expected, revenue is $3.6 billion missing forecast falling 40% to the lowest levels in more than four years. taking a look at its businesses, its four main businesses all

posting double dinlt git declin. investment banking held in strength by debt underwriting. revenue in trading business tumbled. more than 47% decline and revenue in fixed income commodities and currency trading, equity trading also weaker than expected. and weaker than goldman's peers dropping 23%. within investment and lending or its own portfolio, schwartz said declines in the value of public companies completely offset gains in the stakes of private firms. couple of other things to note, he said the investment banking backlog decreased from the end of last year. and also when asked about cost cutting programs which have been reported in the press by goldman, he said we are shareholders and you would assume that we should act as shareholders would in this kind of environment. no other details on that. sarah, back to you. >> all right. mary thompson, thank you. goldman actually leading the dow right now. when we come back, his proxy battle with yahoo is far from over. an exclusive and very timely

interview with starboard's jeff smith coming your way.

with the dow 90 points and climbing, let's get to david faber at the 13d monitor activist investor conference in new york where he's going to speak to an activist currently embroiled in the proxy fight for yahoo. david, take it away. good morning. >> thanks, simon. yep, every year of course we come here to the active passive summit by 13d monitor and we've been lucky enough to talk to jeff smith in the past. and he's sitting across from me

now. nice to have you. >> thanks for having me. >> last year we started off on yahoo and i guess we have to start there this year. these things tend to take time given how long we've talked about this, you are trying to seek nine seats on the board. jeff, i guess my question is with the process of the sale going on right now, and the likelihood that that process will come to a conclusion prior to you being able to seat any directors, why not from your perspective try to reach a settlement to get in that boardroom now and influence the process? >> yeah, david, it's a great question. it's something we keep asking ourselves. and of course it takes two parties to settle. but the honest question around this is what's going to happen, right? so if we continue to move forward and we're continuing to seat nine directors, well, then the company is going to be watched, right? they're going to feel the pressure to make sure they're doing the right thing for the shareholders in order to not get to a result of a change of board

members. but we need to protect ourselves because if we get to the annual meeting and the company has not moved forward as they're supposed to, there's a question here as it relates to capability and credibility of the board members and the management team in terms of running the process. if we get to the end and they haven't been successful as it relates to getting the company sold, the core business sold, we're going to need to pick up the pieces. and we need to pick up the pieces and be able to make change and that's why you have to go for so many seats. now, the other choice as you mentioned is settling. and the advantage of settling today is to work with the company and be a part of this process and add capability and credibility in the boardroom not just for the benefit of shareholders, but also for the benefit of the process and for the potential buyers. so there's a good reason to settle. there's also a good reason not to settle. and it just depends on whether you can get to a position where both sides are comfortable. >> are you anywhere near that? i mean, i would assume given what i'm hearing that there is

some conversation around that idea. and you've just outlined the reasons why it might be in your best interest at least to seek that. and i can imagine on their part avoiding yet another nasty fight that's only going to get nastier as we get closer to the vote and distracting is in their interest. so why not get it done? >> it would be great to get it done. so we are having conversations, as we always do with companies. we speak with every company we invest with. we want to settle. in fact, since the darden situation where we replaced the whole board, we haven't been able to run a proxy contest all the way to a vote. we've been able to settle with companies. we're having a conversation with yahoo as well. if we can reach a mutually agreeable situation, we would do that. we have to get enough members on the board to feel comfortable that we would be able to provide the same capability and benefit in the boardroom -- >> so what's that number, three,

four? >> it depends. it depends on the conversations you have with the other board members. every company's different. there's no formulaic answer, it's a matter of trust that needs to be built between us and the management team and us and the other independent board members. >> you're talking about a process that's ongoing, first round bids due basically today or yesterday. we already have a sense given all the reporting done around this name that verizon very much wants to potentially own it and put a bid in. it does seem this board is approaching things the way a shareholder would want them to in terms of taking it quite seriously in a sale. do you question their integrity? >> well, you know, they seem to be approaching it that way, but you don't know. there have been cases with this management team and this board where they've said they were going to do things over the last several years and then they didn't follow through. so you can go back and they told shareholders that they were going to monetize yahoo japan while in parallel while they were looking at doing the abaco

spin. but that didn't happen. they told us they were going to be looking to monetize their real estate, and that didn't happen. they told us they were going to look to monetize their intellectual property and they didn't happen. they told us that they had reached a bottoming as it relates to their financial results, and that clearly didn't happen. so just because they're going through a process right now doesn't mean they're necessarily going to follow through with the process or get a good result in that process. and it's our job as owners to represent the best interest of the other owners of the company. >> right. what do you think is a good outcome here? i mean, what would in your opinion be an outcome that you would be happy with? >> well, in the case of yahoo, we're still talking about a company where the core assets are worth more than where it's trading. we've been talking about that for years. >> for years. and we all know it's a 34 million shares of alibaba key to that. let's just focus on the core business itself. what's a number in your mind given all the work that you've done that you feel like, okay, i see that printed. i'm happy. >> well, it's the highest

possible price they can get, right? >> of course. >> you know, every billion dollars is a dollar a share extra for shareholders. and then you have to tax effect it after a certain cost basis. we want the best result. we want the best result for shareholders. depends on ha that is. >> obviously it's the highest price, but what's the realistic price? is it five, is it five and a half? >> well, the nice thing about this asset is it's a sought after asset with one of the most recognized brands in the world. billion unique users, unbelievable properties. if you look at the fundamentals, somebody could easily pay $3 billion, $4 billion, $5 billion, $8 billion plus if they cared about it what they're going to do with it. i want the highest possible price, i want a good process, i want to work with good partners, i want to make sure we're figuring out not just this first part. because this first part we're talking about a small difference. the difference between 5 billion and 8 billion, for example, three dollars a share.

but there's a huge difference as it relates to the tax inefficiency that we're dealing with on the other asset. so you actually have to make sure that the board is managing the whole process and not just this process. this is what's getting the air time right now. everybody is talking about what they're going to sell the core business for. >> right. you do. the 40 company left behind conceivably which is the stake in alibaba and potentially yahoo japan which is somewhat complex. fundamentals we're going to get a read on after the bell. nobody seems to think this company is doing particularly well, jeff. >> that's not new. >> no, i mean, do you think it's going to be a disaster though? >> i don't know. just like you don't know, i don't have any inside information. you know, if past is a guide it's probably going to be in line to disappointing. but i don't know. we'll see. >> all right. a year from now you promise me we won't have to talk about yahoo? >> i hope so. >> on other fronts, something we have talked about in the past and i think is at least worth revisiting, not one of the greatest picks you've made. you did it publicly in delivering alpha last july,

macy's. you're not running a fight there. you seem to be at least to a certain extent happy with the moves management has made. in something like that even if you're right on the real estate and the value, you're dealing with bigger issues. whether it's the demalling of america or the fact people aren't going. did you misread sort of the bigger issues when it came to macy's as opposed to the smaller things you thought could create value? >> there are a few things that happened with macy's. from where it is today, macy's is undervalued. talking $19 billion in enterprise value and $20 billion plus with real estate. they've done some good things. they've recently put bill on the board. we worked with him at darden, he successfully did the spin-off of four corners property trust and now the ceo four corners property trust and we worked with macy's to get bill on the board so he could help them. and then they just recently hired somebody internally on the

management team to work on the real estate process. they also announced they're going to take hundreds of millions of cost out of the business. as relates to what happened in the past year, well, yeah, i mean, it wasn't necessarily the demallification of america, i don't think. but i do think last year was a difficult year for department stores. and for retailers. and so we got caught up in that. and i think part of it was weather, part of it was oil denominated currencies. and hopefully things get better fundamentally as it relates to the company. either way we're talking about a lot of real estate value here at the company. >> all right. we're already out of time so we're going to have to do another interview sooner rather than later. jeff, as always, appreciate your willingness to step in and talk. >> thanks, david. >> jeff smith from starboard, sarah, back to you. >> thanks, david. we enjoyed that. we know we have more coming from you at the active passive conference including an interview coming up with ed garden of trian partners. coming up first, trouble mounting at the blood testing

company theranos. the details on the feds launching a criminal probe after the break. i could get used to this. now you can, with the luxuriously transformed 2016 lexus es and es hybrid. ♪

for fastidious librarian emily skinner, each day was fueled by thorough preparation for events to come. well somewhere along the way, emily went right on living.

but you see, with the help of her raymond james financial advisor, she had planned for every eventuality. ...which meant she continued to have the means to live on... ...even at the ripe old age of 187. life well planned. see what a raymond james advisor can do for you. freshly made in the japanese tokyo-sttradition.noodles. when you cook with incredible ingredients...you make incredible meals. get your first two meals free at blueapron.com/cook. it's and as fans of ourselawesome tv! but it is going to take a total team effort to get through all these shows! now are you with me? three, two, one... watchathon! big is back. xfinity watchathon week now until april 24. the greatest collection of shows free with xfinity on demand.

more troubles at the blood testing company theranos a day after ceo elizabeth holmes spoke exclusively to the nbc "today" show. meg is back at hq with more. >> good morning. the company confirming in a memo yesterday it is under investigation by several agencies, these include the state health departments of pennsylvania and arizona as well as the centers for medicare and medicaid services, fda and s.e.c. as well as the u.s. attorney's office in the northern district of california. now, the company does say that the department of health for arizona and pennsylvania as well as the fda investigations have been, quote, successfully closed out. and as you mentioned, elizabeth holmes, the founder of theranos, talking with nbc's maria shriver this week, specifically about the deficiency cited in cms's investigations of one of its labs. take a listen to what she said. >> it's not enough to just fix the issues that they identified. to us and to me we have to

overhaul our whole system, right? and so that means reorganizing our whole company. that means rebuilding literally from scratch the entire newark laboratory. my job is to make sure it never, ever happens again. and not only it never happens again, that i put systems in place and people in place that ensure that we're best in class. >> and you were best in class? >> in the newark laboratory we were not best in class. >> "the wall street journal" also reporting walgreens, theranos partner as well as new york state health department have received subpoenas in recent weeks, walgreens declined to comment. i will bring you updates on that. as for the company they say they continue to work closely with regulators and they are cooperating with all investigations, simon. >> i read that walgreens has 40 theranos wellness centers in arizona. physically there. it's clearly a big deal for them, meg. coming up on the program after the break, an exclusive interview with ed garden of trian partners live from the

active passive conference. before we go to break let's have a look at where we are on the dow. 18,071. getting kind of close to the all-time highs of 18,351 that we had in may of last year. the question is does the price action cause more people who doubt the market to buy in? you shouldn't have to go far

to get the help you're looking for. that's why at xfinity we're opening up more stores closer to you. where you can use all of our latest products and technology. and find out how to get the most out of your service. so when you get home, all you have to do is enjoy it. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. good morning everyone. i'm sue herera.

here is your cnbc update at this hour. armed militants in afghanistan staging a coordinated assault on a government security agency in kabul killing at least 28 people and injuring more than 320. the taliban claiming responsibility. the agency provides personal protection for high ranking government officials. rescuers in ecuador are pulling three people out alive after they were trapped for more than 32 hours in the rubble from the weekend's devastating earthquake. the successful rescue giving home to ecuadorans that scores of people still unaccounted for may still be alive. pearl jam, the latest rock group to boycott north carolina, canceling an april 20th concert in raleigh to protest the state's lgbt bill. critics say that that bill discriminates against lesbian, gay, bisexual and transgender groups. the agency that promotes tourism in raleigh says losses have reached $3 million because of cancellations. and the water woes continue for people in southeast texas. heavy rain triggering widespread

flooding causing trucks and cars to get stuck in those rising waters. more rain is possible again today in the houston area. and that is the cnbc news update this hour. sarah, back to you. all right, sue herera, thank you very much. let's get back over to david faber who is live today from the 13d monitors activist conference in new york with another exclusive interview, david. >> thanks very much, sarah. i'm here with ed garden of trian partners. nice to have you here at the conference. >> thank you for having me. >> start off with ge. we gave that a great deal of coverage as it deserved last october when you bought a $2.5 billion stake, put out a white paper. and the stock seemingly listened in a way it hadn't previously to arguments of value. i wonder at this point are you happy with everything that's been done? because i do recall you wanted more leverage. you wanted a number of other things that have yet to occur it

would seem at ge. >> so ge as you know our point of view is it's the best industrial business on the planet. number one market position in probably the best sectors within the industrial landscape. management recently announced that their new target for margins is 16%, which is what we were pushing for in our white paper. so we applaud that. they've done a fantastic job separating the finance businesses. and it's my expectation that sooner rather than later they'll no longer be a sifi. so i think they've done an amazing job. as you know, we've put out a public price target in the 40s. >> yes, for 2017, i believe that is. >> and we get paid 3% dividend yield while we wait. so it's been a fantastic investment so far. and we're thrilled with the job management skills. >> and you did sell some. if it's a fantastic investment,

why take any off the table? >> well, we made it our largest investment ever and the stock's gone up roughly 30% since we invested last fall. so it became an outsized position in the portfolio. more than anything else portfolio management reasons. >> right. now, the '17 target in calls for the mid 40s relies on a multiple of what? >> you know, we're anticipating that as earnings grow and it becomes a pure play industrial business that the margin -- that the multiple will go up into the 19, 20 range, which i think is reasonable for business of this caliber. >> 20 times earnings for ge? i mean, it's not 1999 anymore. >> look, this is an amazingly resilient business. the reason that we invest in a lot of consumer staples, but the reason that a consumer staple gets a big margin -- a big multiple today they're trading at somewhere between 22 and 24 times is not because they're growing fast.

it's because they're very resilient. right, they're very predictable. and if you think about our analysis of ge, we show the market that peak to trough during the recession ebitda went down. >> are there still things you would expect to see or hope to see, or are you guys going to stay quiet? >> i would not be surprised if they decide to put a little more leverage on the balance sheet. but our return was always driven for the most part by the margin improvement. so we're delighted that they've put the new target out there publicly. and you know having said that i wouldn't be shocked if they suddenly announce that once they lose the sifi designation that they want to put more leverage on the -- remember, we were always suggesting keep it strong. >> understand. different scenario or situation was your involvement in dupont

which went on for quite some time. you tried to get seats on the board and failed and then not too many months later coleman left the company and now the merger with dow. which you are involved in. anybody wants to read the background on the merger as i have we'll see you signed an nda and involved in actually some of those negotiations. even though you weren't board members. >> that's right. >> why did that happen? >> well, i would make the following observation. the close observer i think increasingly understands that the activist moniker is probably not fitting for trian, doesn't really represent what we do and how we do it. and increasingly people are referring to us as highly engaged shareholders. so we just talked about ge. think about the fact that ge probably one of the most important companies of the world wanted us to get involved. that's the part we left out. right, ge wanted us to be a

sharehold shareholder. >> right. >> knew we'd be engaged, knew we'd be informed, knew we'd hold them accountable but wanted us on the board. think about dow, dupont. two iconic u.s. companies where ed breen the day he was announced as the interim ceo and we have very high regard for ed, asked us to speak to the dupont board and talk about where we think the company should go for nelson and i met with the board some time in october and took them through a bunch of different scenarios. and we told them that we thought the best path forward was a merger with dow and subsequent three-way split. we didn't know they'd already been negotiating that transaction. but this is where it gets interesting. both the dow management team and the dupont management team wanted trian to be part of that negotiation to help structure the deal, to help think about things like governance, help craft the right portfolio split. and i think that says an awful

lot. and this transaction is going to create two three must-own companies in my position. a stand alone competitor to dow, i think a must-own business. a specialty chemical business, high margin great brand names like kevlar and tyvek and the world's biggest ag business. >> the market doesn't seem to be appreciating that at this point, it wouldn't seem. the reception has been less than positive. >> i think as you get closer to th-- i think as you get closer to the vote happening and the merge coming into existence, i think the market will start to appreciate what you have here. you also have $4 billion of synergies at least, so i think as this gets closer, as the management teams of each company is announced, as the boards of each company are formed, i think you'll see the markets starting to appreciate what's happening.

>> and finally, the other very large position in your portfolio, not that we don't have time to go over them all, nelson pelts on the board there. some believe eventually there will be consolidation, another phase in this part of the industry and that he'll be a part of that. you've been no stranger in arguing that it would benefit and in fact another large position at pepsi where you don't have a great say in the board room or anywhere else you've been pushing -- >> i would say this. in our business model we're not hoping that things happen. you know, we really look to control our destiny in the investment. and when we invested in mondelez, margins were in the 11% range. last year margins were 14%, david. and management has publicly stated that their margin target is 17% to 18% margins by '18. and that's fantastic. we applaud what management's doing. they're making great progress. we want them to stay focused on that. there may or may not be

strategic opportunities, but in the meantime we're going to focus on controlling what we can control. and i just mentioned in the conference that management's reducing public number 44,000 skus. every single one of those skus -- by the way that's out of a total of 74,000 skus, so a huge percentage. >> yep. >> think about what that means. every one of those skus has recaraw materials taking up space in the warehouse, reducing that complexity is going to drive the profitability that we anticipate between now and '18. >> ed, we have to leave it there. as always, appreciate your time. thank you. >> thanks. >> good to see you. thank you very much. more from david faber at the active-passive conference as it continues throughout the day. coming up on "squawk alley," keith meister and of course the values of the williams-ete deal. ♪

(ee-e-e-oh-mum-oh-weh) (hush my darling...) (don't fear my darling...) (the lion sleeps tonight.) (hush my darling...) man snoring (don't fear my darling...) (the lion sleeps tonight.) woman snoring take the roar out of snore. yet another innovation only at a sleep number store.

a broad measure of market fear has been hitting record highs, so what does that mean for your money? find out tradingnation.cnbc.com. more "squawk on the street" coming right up.

welcome back to "squawk on the street." stocks mostly higher today with the materials sector and the s&p 500 rising about a percent, more than a percent. that sector is among the worst performers in the s&p over the tlast last 12 months. leading freeport-mcmoran. interesting to watch as it's so geared sarah of course the commodity complex. back to you guys. >> and silver at a ten-month high as well. dot com, thank you. our john harwood sat down with

vice president joe biden where he asked him about the political discourse on the campaign trail. and just how he got to this point. so, john, what did he tell you? >> you know, joe biden like a lot of other people says politics is broken. but i asked him if it was broken equally in both parties. >> i think both parties are responsible. but i really do think it started most on the right within the republican party. i won't name two senators, i'll tell you off camera so you know i'm telling you the truth, two republican senators -- remember in the gingrich revolution happened, quote/unquote, and all those new guys came. and then what happened was a lot of those guys got elected to the senate. there was -- they ran against the institution. i'm not making a value judgment. they ran against the institution. hard to make it work when you run against it when you talk about how bad it is. i learned a lesson early on when i came on the floor one day going to a meeting with the majority leader. i was there four months, jesse

helms was excoriating ted kennedy and bob dole for the precursor legislation for americans with disabilities act. i walked in for my weekly meeting basically retrospect taking my pulse to see how i was doing and he said what's the matter, joe? and i just ripped into jesse. i said he has no social redeeming value, this guy, and he looked at me and he said, my word. he said, joe, what would you say if i told you jesse and dodd helms two years ago sitting in their living room in december read an advertisement in the raleigh paper saying picture of a young man had braces up to his hips, both legs with crutches saying all i want for christmas is somebody to love me and adopt me. what would you say, joe, if i told you they adopted that young man? i said i'd feel like a jerk. he looked at me and said, i've never violated since, he said, joe, it's always appropriate to question another man's judgment. it's never appropriate to question their motive because

you don't know what it is. if i questioned your motive, we can never get to a compromise. >> lots more from joe biden on his role in the 1994 crime bill, on his role in the po litization of the supreme court, and tax and carried interest all at cnbc.com/spe cnbc.com/speakeasy, simon. >> excellent, john, thank you very much. of course within the last hour donald trump has cast his vote as new york state heads to the polls today. just how many delegates will he win by tonight? more on that next.

serena williams. hi watson. you are a fierce competitor. i've heard that. i have analysed your biggest matches. oh really? when down a point, you serve an ace 5.8 times more than other top players. you sound like a coach. i am not. but i can customize training programs based on biomarker data. watson, that's pretty impressive. you might say i am the serena williams of cloud-based cognitive systems. nah, i wouldn't go that far.

great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece.

timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. voting is under way in new york state, and republican frontrunner donald trump and demt kratic frontrunner hillary clinton are clearly hoping to solidify the leads in the race today, and joining now is scotty nell hughes, the chief political correspondent for cnn and a surrogate for donald trump. >> and you have to get the titles right here on the floor of the new york stock exchange, so titles matter. >> yes. and would you think that he

would get more than 50% not just at the state level, but the districts as well? >> well, i am very, very optimistic for new york, and something great about the momentum of it, and what is incredible about new york is the broad picture of it. for the most part, mr. trump's popularity has been in the south, and now he is going to be bringing in new york. >> and this is home turf they tell us. >> well, the southerners and new yorkers don't agree on much, but they are e showing the support behind mr. trump, and it is not meant to be in a cheesy way, but a great conservation starter and unifier, and everybody can relate to him whether you are a billionaire in alabama or work here on the stock exchange. >> and now, for you guys, it is critical that he is not winning as many delegates where the states have discretion as ted cruz is. did you guys take the eye off of the ball there by not going tino the states like wyoming or colorado or perhaps pressing the flesh or getting more boots on

the ground for want of a better expression in the gop petings? >> well, talk about the roi, and going in. ted cruz has spent p millions of dollars and obviously, spent a lot of it on the ground game which he started in january of 2015 in colorado. >> why didn't you do the same? >> well, it is different when you write the checks yourself, which mr. trump is is doing, and not spending millions of dollars given to you by pac donors and campaigns. and he is accountable for every penny, and so if you look at it, and look at wyoming and colorado togeth together, 61 delegate, and how many available today in new york, so it is all about playing the ground game, and strategy just like in business, and mr. trump probably realized going after, you could go after colorado and wyoming, but why not more of an inves tment in nw york. >> because he may not reach the magic number. >> that is the calculated gain. >> did he make a mistake? >> well, i wouldn't say mistake, but he thought that people when they went to the polls and their

voice would matter, but in georgia where the trump slots are filled with slots from other people in campaigns going in there. >> and i am glad that you raised tissue, because when you win the popular vote, they will assign you a delegate whose personal views are for say ted cruz, and after the ballt lot, they revert to their own personal choices there. is an editorial in today'sle "wall street journal" that explains it this way. donald trump's real problem is that millions of americans increasingly fear that he is going to be losing in a november landslide. and candidates who are liked tend to lose the campaign, and mr. trump has shown little capacity for or interest in improving the image. >> and look at the alternative. mr. trump is popular in the delegate and the pop ular vote than all of the republican candidates, and he is truly the best investment. >> and the criticism here from the journal who is not known for being liberal on the issues, and

it is a fact if you look at the "wall street journal" poll 2/3 of the pub lib don't like him, and those people don't tend to win which is why after round one they may refuse to cruz. >> or if we go to round two, you will see a round three, because you have the trojan horse delegates there, and remember that unfavorable does not mean not voting for. at this exact time mitt romney had higher unfavorables than donald trump, and ted cruz is a tiny bit at 58%, so none of them are faring well, but you are also not comparing the apples, and the apples, it is apples, and oranges with the democrats, and that is what the polls are not putting in the numbers there. and it is independent voters and this message is wonderful how the people's voice is being denied and the republican and the democrat voice is being deny and that is transparent. >> and it is transparent that people running for office have understood the rules for the gop, and only mr. trump who may

have missed a trick. >> and those tricks are happening, and the rule was changed in colorado. they took away the binding of the delegate s s to the straw p, and also last spring, a bill is proposed to open it up to a regular election and brought down by four people who now sit on ted cruz's leadership committee, and it is politics to keep the politicians in power and not necessarily the people. >> and you use the word unifier, but the problem is that he is not able to unify the party, and forget the general election, and he does not have the support of his own party, and there is a great op-ed in the washington post, and it questions if the party does end up backing him, and portray unity against hillary clinton, at what cost are they doing that and what message are they sending that he is talking about building walls, and missoj nis tick comments, and you know, because you have defended all of it as a surrogate, but he can not manage to unify the party. >> as we see that right now, we

are noticing the trump developing, he has gone through 17 on the stamg and he has not compromise the principle, but you have seen the change of the message which is the better part of one-on-one race, and you will see the presidential candidate that everybody is look g fing f >> good to see you, scottie, and sparing the time. scotty nell hughes, chief political correspondent, thank you. and coming up next, keith meister coming up from the conference with david faber who will ask about the deal with williams there.

here at the td ameritrade trader group, they work all the time. sup jj, working hard? working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivatives pricing model, honey? td ameritrade.

good morning, it is 8:00 a.m. at the netflix headquarters in los gatos, and "squawk alley" is lye. ♪ ♪ people keep on learning ♪ something