last eight years. can we average 3% or do it for one year? >> i think we can average 3%, but we need to get going quickly on these pro growth measures. >> no kidding. i believe you. now, i'm going to use that. i'm going to use that sound bite every time someone comes on, we can't do 3%. i'm going to use that, because you know, because you're mohamed el-erian. thank you for being here. i'm not mocking you. i did not mock -- not at all. go ducks, oh, sorry. tomorrow -- "squawk on the street" -- join us tomorrow, "squawk on the street" is next. ♪ good morning. welcome to "squawk on the street." i'm david faber along with jim cramer. and we are live from the new york stock exchange. carl quintanilla has the day off. let's a look at futures as we're one half hour away from the beginning of trade. kind of a mixed bag at this point. i'm not going to call it open --

i mean, up or down. let's just see. the european markets have been open for some time. there we can give you some actual answers. also, well, largely down other than the ftse in the uk which is up. but no great moves there. thank you for italy and spain in the control room. i like to see a broader picture other than the big three. as for crude oil which we go to next, 2.276. wti back above -- well above it's kind of a stealth move there a little bit. >> that's all talk ahead of the opec meeting. >> hot air? >> yeah. the saudis have cut back by 500,000 barrels because the u.s. is increasing by that much in if next four months. >> so interesting. we'll talk oil during the show but let's start with retailer. two are falling sharply. tiffany with a surprise drop in same-store sales and lowe's also

missed on its top line. plus, we're awaiting a new outlook from the fed. the u.s. futures are more or less flat after the longest winning streak is extended. over in china, a downgrade. moody's lowers its rating on the country itself for the first time since 1989. tiananmen square back then. well, shares of lowe's are down sharply. you can see over 3% there after it missed with the quarterly revenue and same-store sales and tiffany a bit lower. actually, much lower than lowe's is on the stock basis. first quarter profit was ahead of estimates but revenue was a bit shy of consensus. weaker than expected sales a surprising decline in comp sales. not just the flagship that was affected by the trump barricades

here in midtown manhattan. >> look, i was surprised by the stock has run a lot. so therefore, people kind of felt that something good was happening. europe minus 3, minus 4. we're hearing from a lot of companies that because of the dollar being weaker, they have gotten more tourism, gotten more dollars in. that did not affect them. so that was disappointing. lowe's, i want to point out and i just want to say something positive about lowe's first, they did reaffirm guidance but it was not what i expected. you know, missed -- miss on the bottom line, but the same-store sales, 1.9. i was looking for 2.6. this is so difficult from home depot. i think that the thesis here is going to be, home depot f you go back over the quarter and they're incredibly transparent it was the contractor. and lowe's, i think people would always say is much more the regular consumer. home depot contractor business is very, very strong. in keeping with the whole notion of remodeling which is behind a

lot of the spend for homes. >> right. a contractor, if you're doing something they go with i think that pickup truck and load up at home depot and all the stuff you use in your home they have right there. >> look, lowe's they have done a good job and they had a different comparison versus last year. that's also important. you have to look at what's a two year stack and lowe's is not that bad. i feel defensive on lowe's if only just because i don't think people should decide lowe's is bad, home depot is good. this is the one category that's been good. and if you compare this against a lot of other retailers it's not hideous. so i'm giving lowe's the benefit of the doubt. they're watching and i think they deserve to be able to say, listen, we're number two to home depot. but versus everyone else, come on. >> we're still a decent spot in

the bad neighborhood. but talking about bad neighborhood, tiffany and the mall, do i take anything away from this at always in terms of our ongoing conversation about the decline of the mall? >> i think you can. >> whether that's having an i want pact. >> i think you can. go back over footlocker, and that haves a disappointing place. and david, if you have stores in the mall, apropos of you go back to a key conference call with howard schultz, okay, and kevin johnson on starbucks. where they said, even their teavanas were bad in the mall. in other words, they bought this chain. >> bought this chain. >> they're going to integrate some. but a teavana is so bad, they're closing stores. the mall can pull down anybody, but i don't understand europe. europe is strong. do they have the wrong style because europe high end has been good. i have pvh on tonight, manny tree coe, because he's one of my

sources not yours. what he is going to tell me -- oh, i'm sorry. >> that's okay. i have no intention of trying to take him away from you as you seem to do with all of my sources but that's another conversation for another day. >> you do not have him, he's showing up in your conference though. >> we're going to get the definitive word from him. if you have been to the tommy hilfiger in europe it's the pinnacle -- pinnacle of like if you go to their madison avenue it's a killer store. the people wait outbefore it opens. you know, if you want to get into the social life -- >> i did not know that. let's talk about the broader market. you saw stocks right now at least futures not looking for very much. but you're in the midst of the four day winning streak. we erased all the losses from the sell-off last week. one big down day we had.

later today, the fed is due to release minutes of the may policy meeting. meantime, moody's downgrading china's credit rating for the first time in almost 30 years. it sees the financial strength of the china's economy eroding some. china and a rise in debt is not a new thesis. they're awash in debt in that country. now they push back vigorously on that. we find a way to actually use the capacity we are creating. we are not just creating idle capacity. >> they do have good reserves so, you know, always -- i was watching the sara/wilf show. >> swilf. >> and sara said she read a note of a noted adviser, this is another blah blah blah from another blah blah blah downgrade and wilf said this is full grown

sarcasm about the downgrade. the reason is that the chinese have a controlled economy. and so it's difficult to get a real read on what -- how impoverished they are. i look at the alibaba quarter. the ten cent quarter, the jd quarter. the wee bow quarter. they have companies that are doing unbelievably -- >> extremely well. >> they though in the financial sector have companies that are not particularly transparent. i'm thinking of on baun -- >> the one that disappeared? >> chairman wu, they sell a lot of the -- they sell a lot of the products that have a high return, a death benefit, can be shorter duration. then they're buying long duration assets. >> are you serious, do you know who did that? some of the major corporations here. >> when you talk about china it

depends on who you're talking to and they're -- those who are worried will focus on the proliferation of the wealth management products through the banks. a lot unregulated or at the very least, not quantified fully. >> i come back to the middle class classification of china and how tim cook from apple and many of the auto market, how ford -- mark fields did not have in the fastest growing market he did not have good exposure versus general motors. gm -- a hedge fund is trying to do something, i don't know what. >> coming up for a vote. >> china is an enigma. others have said that. if we don't -- if we actually laugh and scoff at the debt situation that's when you know it will come back to bite us. i'm glad you brought it up. because they're spending fortunes to try to keep their government in. >> yes. and they do spend a lot more in infrastructure as a percentage of gdp than we do. >> they have to.

they have close to a million people dying every year of respiratory illness that's not a thing that the communist party leadership can afford. that's why they're out front in a lot of things involving the environment. >> including solar that downgrade did nothing to the equity markets but it's worth noting. as for bringing it back here home, jim, what we're now cussed -- focused on this morning, we got the budget proposal yesterday. the president continues to be abroad, meeting with the pope and others. >> the pope gave him a book on climate change. >> what are the chances are that he'll read that? >> i don't know. that's -- i don't know. it's on his reading list right now. could be anything. maybe "the art of the deal." rereading that. his budget was the beginning, that was the opening of the deal. >> opening deal. >> yeah. >> kind of like here's my deal. nothing. i'm surprised he didn't make the senators pay the casino license. >> yeah. he's still talking deals, certainly one between the israels and the palestinians was

one yesterday. back to here. washington figures so prominently in the way that people are thinking about things. in the conversations i have had with a number of investment managers over the last day, they seem to just -- kind of be moving along, things are going to be okay here. >> paul ryan said -- >> i'm not looking for tax reform anymore but we'll be fine on earnings. it seems to be more of the same. >> the only thing that i'm thinking about with taxes was that incredible number from intuit. that is their quickbooks. they are an amazing company. brad smith using artificial intelligence, largely from sales force, has crushed the competition. they're using einstein -- >> $33 billion company. it's going to be up today. >> they're using einstein, h&r block is using watson. right now einstein is killing watson. although artificial intelligence, the game of go was won by a computer versus the

champion. >> ai power did win. >> because they learned while -- >> it's massive computing power. a lot of computer power -- >> david, they're learning faster than we are. >> we'll talk about ai and how long we have to survive as a civilization and species, but first to jeff bezos. he'll make sure he'll survive. >> he's the guy who created things -- >> what an incredible outfit he's got. he's got another message for amazon shareholders after a record setting year for the stock. we'll show you amazon's new store. yes, a store front here in new york. take another look at the futures. we have a lot more "squawk on the street" from post 9 after this. are you ok? what happened? dad kinda walked into my swing. huh? don't you mean dad kind of ruined our hawaii fund? i thud go to the thothpital. there goes the airfair. i don't think health insurance will cover all... of that. buth my fathe!

without that cash from - aflac! - we might have to choose between hawaii or your face. hawaii! what? haha...hawaii! you might have less coverage than you think. visit aflac.com and keep your lifestyle healthy. aflac! i can't wait for her to have that college experience that i had. the classes, the friends, the independence. and since we planned for it, that student debt is the one experience, i'm glad she'll miss when you have the right financial advisor, life can be brilliant. ameriprise

amazon shareholders have many reasons to smile. the stock has hit record highs and risen 38 just over the last 12 months, but at the annual meeting yesterday, jeff bezos cautioned against complacency. he said we can't rest on our laurels and noting that amazon has seen four presidents during the existence as a company and that under all of them,

customers have liked low prices, fast delivery and vast selection. vast selection has only gotten delivery. the delivery has only gotten faster, but i'm not sure the prices have gotten lower. >> no. those who have prime feel like they have gotten in. something i bought some on prime, and some heads at the department stores have said you know ours are lower? >> just to do a little plug for them, that credit card offer you get 5% off on everything you buy on amazon. >> some people call it am azin. >> they're opening a bookstore at the time warner center. >> don't you think the irony after wiping out the bookstores. >> by the way, in a space that borders hat. >> i went to the home of the great turn around, turn around artist who's now running ford.

okay? because remember he turned around that athletic program who was just huge, harbaugh, i think it's important to point out, he turned around the michigan program. >> by the way, at the bookstore -- >> he wiped out borders. i remember speaking to borders, they had a bookstore at the university of michigan where the guy from ford turned around the program and that guy joseph, the guy who ran it and said, amazon cannot wipe us out, because people want to go to the temple of learning. they want to go to the bookstore. well, amazon was ultimately right. it was not border's bookstore they're going to. >> and the temple of learning is on your phone to a certain extent. but it's interesting. it's -- in some ways it sounds like a wine store. everything will have reviews under it. tell you more about what amazon -- >> like parker ratings? now this gets a 98 from david faber. >> that's right. but they -- they're basing it much more on the algorithm. >> right. if you like this. then here are 400 other books you'll like.

>> i guess some people buy books. >> you did that great special. i mean, do they do this as -- for irony or doing it to be able to say, look, here's a human sample. we're going to match that against the algorithm? >> i think data is so important for this company. this is not something to make money in itself the store itself. but it's something they can do i think that they think will be beneficial to the brand and beneficial to their ever increasing need to take in data and see how it goes. we have talked about the possibility of other store fronts for amazon and other areas. don't forget that cashless thing -- >> let's go full circle. shouldn't walmart have an edge with all of the stores and the 100 million shoppers, shouldn't they have an edge over amazon in that walmart has the best fleet of stores in the world. >> walmart was well ahead when it came to technology. remember data. i remember from the first -- from my first documentary that strawberry pop-tarts, when a

hurricane is coming they notice a -- they know to stock up on the strawberry pop-tarts in the stores because people like them. they were well ahead of it. >> and jerry seinfeld said he thought the pop-tart was the greatest -- he said that was a breakout in his house. seinfeld -- >> i'm talking about the wrapper. the pack of pop-tarts. >> did you know that hackett turned around the university of michigan athletic program. do you know how big that is versus ford? >> this morning, moving on actually to other things that are not quite as jolly, this morning we are remembering our good friend mark haines. he passed away six years ago today. mark of course the founding anchor of "squawk box" and a co-anchor of "squawk on the street." we remember mark for his knowledge, his wit, for being a champion of the small investor and his steady hand of course during the dotcom bubble.

9/11. the financial crisis as well. he called the stock market bottom of 2009 and we call it here as the haines thought. our thoughts are with his wife and his daughter on a sad day for us all. i love how usaa gives me the peace of mind and the security just like the marines did. at one point, i did change to a different company with car insurance, and i was not happy with the customer service. we have switched back over and we feel like we're back home now. the process through usaa is so effortless, that you feel like you're a part of the family. i love that i can pass the membership to my children, and that they can be protected. we're the williams family, and we're usaa members for life. call usaa today to talk about your insurance needs.

that was some video from

vistra energy which is coming public here i believe -- is it coming public, vst, here at the nyse. let's get to the "mad dash" as we count down to the opening bell. you have mentioned it very briefly, but it's worth getting into it a bit more. >> absolutely. here's another thing that you stress that is not talked enough on the network or anywhere else. we don't talk about the gig economy. well, brad smith, the ceo of intuit says the gig economy is behind a lot of their growth. that's 34% of people who are self-employed. what does he bring up? who are the kind of tax returns they're doing? the people who work at uber, lyft, doordash. task rapid. 60 million people coming through quickbooks and this gig econgoing to 43% is who they're picking up. and you know the actual tax return business is flat. but what i find amazing this is the shift economy is what i call

it. we have at bar san miguel, they want to work 6:00 to 8:00, that's all they want. or drive a cab -- a fantastic book by adam he shinsky, about uber. these are the people who are looking for some sort of way to keep their taxes. and they're not traditional taxpayers. >> again, revenue is up 10% to $2.541 billion. the quote from brad smith this was another strong quarter for intuit with a hard fought tax season. what does that mean? >> because the government is trying to crack down on the people who submit your return, to get your money, that's how they find out it's you, not someone scamming you. salesforce.com set up the artificial intelligence stuff that's made it so that they have this step up. h&r block is struggling -- everyone is struggling versus

intuit. artificial intelligence, machine learning, gig economy, in other words, we're nothing. >> we're nothing. >> by the way on all of those fronts with we'll talk more about the vision fund and nvidia when we come back. you also saw brad smith who will join us in the next hour. >> he is? he's so cool. he's really great. how did you get him? that's one of my guys. who took him? >> i don't know. >> he always comes on "mad money." >> hard fought -- >> he's can -- that's outrageous. but we have three guests tonight. maybe i couldn't fit brad. >> got the opening bell a few minutes away. stay with us on "squawk on the street."

we're facing 20 billion security events every day. ddos campaigns, ransomware, malware attacks... actually, we just handled all the priority threats. you did that?

we did that. really. we analyzed millions of articles and reports. we can identify threats 50% faster. you can do that? we can do that. then do that. can we do that? we can do that. but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. with it, i earn unlimited 2% cash back on all of my purchasing. and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... which adds fuel to my bottom line. what's in your wallet? ♪ predictable. the comfort in knowing where things are headed. because as we live longer... and markets continue to rise and fall... predictable is one thing you need in retirement

to help protect what you've earned and ensure it lasts. introducing brighthouse financial. a new company established by metlife to specialize in annuities & life insurance. talk to your advisor about a brighter financial future. the opening bell is brought to you by brighthouse financial. established by metlife. you're watching cnbc's "squawk on the street." we are live from the financial capital of the world. the opening bell will ring in a minute and a half from now. as we get started with hump day. it's wednesday. >> i know. i can't believe it's wednesday. this week -- >> it's almost memorial day. >> it is. it is. what's the key to the market today, mr. cramer? jpmorgan? >> yeah, because today is the

2:00 fed notes and jpmorgan needs those rate hikes. do you know that stock has fallen 10 points? if you get the fed saying, listen, we're still on course. jpmorgan would have to lead any rally. if they lead a rally, it's a rally that will be of significance because the financials have not led a rally in months. >> you see it there. that's one of the better perform earns. it's flat year to date. 32% plus gain for the last 12 months now. let's not forget that these stocks were all up sharply. >> it's been -- >> going into the -- >> but we need -- remember, that's a deregulation play. that's the lower cost compliance. that's maybe a big dividend or buy back. most importantly, they need the rate hikes. so you need to see this and it is incredible, david. goldman sachs, not the key to the market. down big. jpmorgan has done great. it's the one to watch. >> goldman had the poor quarter. not a good quarter.

jp was a good quarter. >> it's a puzzler. >> although we have talked to david solomon about it and others. here's the opening bell. here at the nyse. back at hq, let's see how we end up there. kind of a mixed open. here at the big board, texas based energy celebrates a recent ipo. over at the nasdaq, superior uniform group. superior uniform group, jim. don't know what they do. >> there's a couple of great bull markets going on that we should talk about. one of them is this -- is lab equipment. medical. yesterday, charles river rang the bell. they do testing. thermo fisher -- >> they had a great year so far. the stock. >> yes. so look for the quiet bull markets.

that becton dickinson merger, that stock is doing well. that's in terms of takeover activity where it's really paying off. it's suppliers to the drug companies and to the hospitals. thermo fisher being so, so strong. i watched this go up. a company you introduced me to, henry schein doing very, very well. and align is the hottest of all. that's braces. >> really? >> braces for dentists. very, very strong bull market going on. that nobody is paying attention to. along with the humanization of pets and the video games. i have take two on tonight which is incredible. >>off strauss on tonight? >> yeah. what a winner. what a winning stock that is. winning guy. >> yeah, we'll get to everybody you have on "mad money." we'll promote all of your fabulous guests including strauss zelnick. you don't have henry schein on, do you? >> no. >> stan bergman? >> no. he'll come on though. but look, there's a little bit

of a friendly rivalry but this is one of the moments, david, where this video game business has broken out because of e sports. and people going to watch other people play. >> i know. we come back to certain themes. our viewers are going to start to hear more about e sports. >> they have to. 30 million people. >> it's getting real sponsorship over at activision i know bobby codic very focused on it. you have colleges now that actually recruit for e sports. >> yes. remember youtube, twitter. everyone wants to cover it. if they fill the garden in boston like that. it's maybe the strongest trend that nobody talks about. we have to be -- because it tends not to be guys our age, but -- >> no, i have not really played one of those games let alone watched somebody else play them. >> you haven't? i have to tell you, my nephew says, they have -- they delayed that until next year, redemption 2, because it's from the ground

up. david do you know what it's based on? >> what? >> nvidia. >> all right. let's talk nvidia. because the stock is going to be up again on news -- i think reported by bloomberg that softbank's vision fund has taken a stake in the company. kind of out in the marketplace for a bit of time here. so i wouldn't look for too big of a move in the stock. it's up over 2%. of course this is for a stock that was sort of slowing down a bit. right, we're right at new highs. >> nvidia -- this would get a hundred speeding tickets, like going 90 miles an hour. >> for people who are interested i would send them to the may 10th investor day presentation from the company's ceo. >> that was a tour de force. that was the hamilton of presentations. i'm not kidding. that was the sold-out "hamilton" play. >> and jensen -- how do you pronounce his last name? >> juan. >> just talking about the future and the decisions that nvidia

have made that have done so well, but talking about the next ten years. and what is going to happen. >> well, do -- >> how he sees things advancing in terms of nvidia and what they'll be needed for and what they have focused on. seven times in five years he kept talking about it. the way to think about it in five years time whatever capability i have in self-driving cars, it will be seven fold. five years from now, we'll be seven x. whatever functionality we have will be improved by a factor of seven. that's what he was talking about. >> and this man is so not a puffer or a guy. rbc is talking about how the self-driving cars need graphical processing. this is a company with a vision and the vision is that everybody's going to need artificial intelligence. you can't use regular code writers. that's his theme. regular code writers -- you ask people what they do, and who's good, well, google has great

code writers. facebook. he said it's too complicated even for code writers. it as to be done in the artificial intelligence way and nvidia is thinking like this. i think i like -- i think brian krzanich understands the need not to be like this going like with skyworks and broadcom when it came to cell phones. nvidia has a lead and it's just a tight, tight -- >> softbank's vision fund which by the way just last week had the first close. $93 billion. you're going to be hearing about this so often in the tmt space -- technology, media, tell come. because they're moving at a rapid pace there. not just nvidia but the other things that they're considering of course. remember they moved 25% of their equity holdings in arm holdings which into the fund that has the contribution from softbank itself. the saudis though reported to be

in there for $45 million. because they divert a lot of money out of petroleum into what they believe is the new world. they're not afraid to pay high multiples or to put leverage on things. they'll have 100 billion in buying power they'll lever that up. and don't forget softbank bought fortress. my understanding is they're live -- going to lever up fortress as well. so it's not just the equity, it's the leverage they're going to add to it. the buying power, the vision fund will have believe me when it comes to bankers and everybody else, they are so focused on this fund and what it will be doing. >> wow. fortress did have one of the largest collection of hotels in japan. people didn't talk about that. that was one of the great assets. >> i did not know that. >> which will come in handy in the olympics. yes, they do not play by the same rules because they're not -- no one is going to say --

it would have been too expensive for any american company to buy -- >> they paid that multiple at 40 times. the same way, buying up -- whatever the number may be of nvidia. the others are reporting. but they're not afraid of multiples because he's looking -- listen, moss' son is a confident guy. when you had success like you did with alibaba and with the wireless provider in japan they bought from vodafone. yahoo japan. >> just to be watched because when you're dealing with companies like broadcom which is a smart company, dealing with sky work solutions they play by everyday rules. they have a price to earnings multiple not like what -- my charitable trust owns, if they buy the flash business from toshiba. they have a stretched balance sheet. >> that is a very interesting option going on for toshiba's

flash business of course. being sold in part to keep toshiba out of serious trouble after they fired their westinghouse subsidiary, it gets so complex. westinghouse building nuclear facilities for the likes of southern company, will they continue to do that? >> yeah. >> what would happen if toshiba was unable to sell flash in a timely manner and the japanese government having to get involved in creating sort of a consortium that would buy it in company. you have foxconn, but nobody is going to let them buy because of national security concerns in japan and the u.s. you have broadcom here, which has interest i can tell you. is focused on trying to get this done. >> they have some big deep pocketed private equity money. >> who is western digital going to bring in? they might not have the wherewithal to pull it off. >> the local press is saying they could have a special purpose vehicle. wouldn't that be something, martin franklin like.

then david, possibly incj. >> that's the -- that's in country consortium. >> people don't realize how the big the toshiba deal is. >> westinghouse is a big deal here. >> they can't make the plants well. >> no. overruns were enormous. >> right. >> obviously, this is incredibly important company in japan itself. then the business itself. it's a huge business and as incredible -- it has incredible importance. >> to speak against my charitable trust for a second, flash they were a sandisk partner to them, not western gij tall. they're trying to block the deal saying it's an unfair deal and david, i would tell you that a lot of people feel what they're trying to do is hold up -- make it clear that unless they make a deal with -- unless toshiba makes a deal with western digital, they'll stall this. toshiba is like day to day as to

if that i'm run out of money. a gigantic company. >> that's a story we'll be following here. we have the different parties -- >> bigger than whatever is happening right now, with things in our country. >> let's get back to retail. chico's we didn't mention. a small company, over a billion dollars. >> it used to be a big company up. minus 8.7 domestic same store, but what people want to know, this is white house black market. david, is there a mall in the world that does not have a white house black market and is there a mall in the world that is in the white house black market. >> what is a white house black market? >> i bought my wife something there once. >> so it has nothing to do with the white house in washington, d.c.? >> no, no, it does not. a very good -- yeah. and yeah.

>> nothing to do with ivanka? >> no, no. just a regular store. but it is the challenge kind of store -- not unlike ka sena. it has 4,800 stores. another horrendous store, that's dress barn, lane bryant, ann taylor. and then of course, maurice. >> maurice, don't forget him. >> yeah. >> speaks with a -- the maurice chain. >> i like that word, pompey dis. >> steve miller made that up. >> tiffany is down 8%. >> everyone thought -- you know, they have the interim ceo. everyone thought this was tiffany's time, particularly since the president lives at the white house black market and not the -- where tiffany was being killed. frankly they're not saying the kind of things that we thought from the conference -- >> they said generally soft performance across the country here in the u.s. which they at contribute to varying degrees -- attribute to varying degrees of

weakness in the foreign and the tourism demand. >> oh, come on. >> they said they had solid growth in latin america. >> this stock had run tremendously. there was a lot of takeover talk about that. this was one by the way, david, that was not mentioned with kraft heinz. >> no. no. kraft heinz not looking at tiffany. >> can you tell people how every day, someone says i think kraft heinz is talking to somebody? >> i think chico's and tiffany is off the list. bob pisani has more. >> good morning. been away for a few days been a great four days. look at this. the s&p up 46, 47 points in the last four days. that's about 2% move for the s&p. we are what 24.05 so five points away from a new intraday high. the banks have been up since i have been away. the ten year yield has been moving up here. they have been generally up

almost 2% for the week. it was up on the open. tech and leadership. energy not doing anything. of course you know what's going on with retail. look at citigroup, 1% below a new high. most of the banks aren't there. but that's been doing very well and holding up throughout the middle of the year. you know what's going on with the retailers, the miss on the top line of tiffany's. same-store sales weak. comp, i can't emphasize it enough. look at the comp sales different. lowe's, home depot 6 3rs %. a lot of people are trying to figure out what that means. the obvious answer is they're ceding share to the bigger contractors that go to home depot. that seems to be the obvious reasons. nobody has said it's anything other than that. i would point out lowe's is one of the small group of stocks that are buy back monsters. they're aggressively buying back stock. they bought back 2% of the shares outstanding in the first

quarter. so enormous. so in 2010 they had 1.4 billion shares outstanding. now they have 858 million. that's a reduction of about 44% in the last 17 years. that means all other things being equal their earnings are 44% better. all things being equal. so that's a huge difference for them. as for tiffany's, indpoint out a -- i would point out a couple of things. they were up 20% on the year, they were up 20% on the year and they had a forward p/e it's come down and now it's now 21%. so it's a reasonable valuation that tiffany has. much closer to the historic averages. retailers by the way are starting to show some amazing dividend yields. chico's has a 3% dividend yield. macy's, 6.5%. this is above what the utilities are paying. i have a whole bunch of them

close to 5% right now, but the question is are the dividends safe right now? i don't think anybody is outrecommending the dividend yields but fun to see them way up there. i spoke to the retail metrics 75 of the 114 they cover reported -- it's a pretty dismal quarter, down 2.5%. it was down in the fourth quarter. first -- second quarter is expected to be up. but i anticipate that would go negative within the next several weeks. finally, a lot of discussion this morning about moody's downgrade of the chinese sovereign debt. a lot of discussion but the chinese markets are holding up very well. foreign investors have little exposure to chinese treasuries. right now the dow up 17 points. we are five points from the new high on the s&p 500. david, back to you. >> thank you, bob. let's head now to the bond pits. join rick santelli at the cme group in chicago. >> good morning, david. you know, the equity markets of course putting the string together. not necessarily big numbers but big enough to offset left

wednesday's downdraft. the treasuries have remained rather stable of late. even though to many they're below what was a solid range of 230 to 260. but we're still hovering pretty darn close to a significant level arguably anywhere from 225 to 227. but let's start at the short end. yesterday we auctioned off 24 -- $26.02 year notes. 1.316 is the new yield. the guys were trading right there. we have fives, we want to pay attention at $34 billion. look at the one week of tens. a drift higher. do keep in mind we can't usurp the low yield close of the year, although we got close last week that coordinated with the drop of equities. a year to date of tens. verying. while twos are at -- they settle at 119. the tens right now hover, at 228, settle at 234. let's look at europe. considering the couple weeks we have an ecb meeting.

everything is hunky-dory, don't worry about the normalization that i don't know how they're going to accomplish. but it seems that that and a downgrade to china just look at markets for today. the two year closed at minus 77 in europe. now minus 65. so yields are definitely higher. minus 65. anybody holding that paper good luck in the big picture. year to date of bunds, they settled at 21. almost doubled that at 39 but unable to usurp the top of the range which is 50 basis points. one week of the dollar index, nothing to get excited about except for the intraday. pay attention to that level. david and jim, back to you. >> thank you, rick. when we return, we'll give you a list of the ten highest paid ceos in the united states. it's dominated by the way by leaders in one particular industry. >> that you know well. >> that we know well.

♪ to err is human. to anticipate is lexus. experience the lexus rx with advanced safety standard. experience amazing.

i count on my dell small for tech advice. with one phone call, i get products that suit my needs and i get back to business. ♪ ♪

a list of the highest paid ceos in 2006 has been released and the results compiled by equilar for the associated press. top of the list is tom rutledge. $98 million. an increase of 5%. and leslie moonves from cbs who re-signed by the way, up to 2021 he's second. bob iger. there's activism blizzard earlier. he's created a lot of value for the shareholders as well. rounding out the top ten, brian roberts of comcast. jeff lukas who sold his company to at&t. jenny rometty she had a good year in pay. and steve wynn of wynn resorts. a lot of people paid of course in equity and it is interesting

they do deals. on some of them, you know, the stock kind of does a round trip. but the ceos make an enormous amount of money. i have pointed out though when it comes to be rutledge he still got options and things that don't kick in until the 500s. one reason may they not have any interest in doing a deal. and signed the cooperation deal with the parent company, comcast. when verizon was in play a little bit i did point that out. look at discoverry though. when you talk about malone paying people with stock. which he likes to do and wants to do. but doesn't work out as well for over five years sometimes. >> do you think it matters whether the person built the company? >> yes. >> i mean, the roberts -- >> i do. i think it does matter. >> so roberts -- they created it. they built -- >> the founders are the founders. >> steve wynn works incredibly hard. >> what's his name -- oracle, usually -- ellison is usually on the list. >> he built the company.

tremendous achievement. i think we should distinguish between managers and people who built it. >> completely agree. up next, we have "stop trading" with jim. we'll be right back. how come no one likes me, jim? intel does! just think of everything intel's doing right now with artificial intelligence. and pretty soon ai is going to help executives like her see trends to stay ahead of her competition. no more sleepless nights. - we're going to be friends! - i'm sorry about this. don't be embarrassed of me, jim. i'm getting excited about this! we know the future. we're going to be friends! because we're building it. the power of 100 of the world's top companies. the power of a proven 15-year track record. the power of an etf. the power of qqq. the thinking we put in, clients get out. power your client's portfolio at powershares.com/qqq.

before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus containing this information. read it carefully. distributed by invesco distributors inc. containing this information. read it carefully. ready or not, here i come.ek.) ♪ anyone can dream. making it a reality is the hard part. northrop grumman command and control systems always let you see the complete picture. and we're looking for a few dreamers to join us.

time now for jim and "stop trading." everything is bigger than u.s. steel. >> credit suisse -- i'll tell you why this is an important call. this sector has been hit very hard. why? because people bought it in anticipation of a big trump infrastructure bill. and that trump would go into the chinese and just say, listen, you're done dumping every bit of kind of steel in our country and we do the defense -- you know, an actual kind of a very tough stand that says, listen -- it's important for our defense business. it did none of this material wise. this is crushed by the no trump trade. >> crushed recently, although again up nicely for the last 12 months. >> yes. but letter x not really, but i want to point out to people t t ththat this is a group that is bifurcated. there's u.s. steel which is very

challenge and then new corps, it's allowed to have fair trading would be the lowest cost producer. but a lot of countries subsidized so it makes it an uneven battle. we are just waking up to the idea that we have been in a trade war. thank you to the ceo and dan d'amico the previous ceo. >> what do we have on "mad money"? >> i wish we had domino on. >> i know one of the guests. >> from take two. a franchise -- the best tell on back to school and then on apparel. matt maloney, grubhub, has been taking share and names. everyone felt the competition would get to them. they have reigned supreme at the stay at home economy.

you do grand theft auto, you have doritos and you drink low dell low and constellation or maybe have a jack daniels. >> i'll see you tomorrow. >> i brushed my teeth with a bottle of jack. >> i have seen you do that. >> in the '70s. >> that was your century. >> we have brad smith, the stock up on a very good earnings report. oh, not so fast, carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity... ...and four times less than vanguard. what's next, no minimums? ...no minimums. schwab has lowered the cost of investing again. introducing the lowest cost index funds in the industry with no minimums. i bet they're calling about the schwab news. schwab. a modern approach to wealth management.

♪ good morning and welcome back to "squawk on the street." i'm sara eisen here with david faber and mike santoli live at post 9 at the new york stock exchange. carl has the day off. let's look at the markets because stocks are higher. fifth day in a row. fractional gains here by the s&p and nasdaq both within a few points of a record high. oil is unchanged. if it is higher that would be a sixth day in a row as it goes above $51 a barrel as the opec meeting gets oourd in vienna. >> let's start with the retails. tiffany, lowe's, advanced auto parts, all are down.

we' we'll dig through this wreckage. and moody's slapping china with a downgrade. and plus intuit's tax season success. beating the street and issuing an outbeat outlook. let's go to diana olick for more numbers. >> reporter: it's a miss on existing home sales, down 2.3% to the seasonably adjusted 5.57 million units. the street was looking for down 1% and march is very strong read was revised down as well. we are now up just 1.6% in sales year over year. that is below expectations. what's the problem? a lot of listings for sales. inventory is 1.93 million homes per sale. it's the 23rd straight month of annual drops. we're at a 4.2 month supply. just for perspective, six months is a balanced market.

anything that is listed is flying off the shelves. days on market down to 29. that's down from 39 days a year ago. that's how long it takes to sell and that is the lowest time on market since the realtors began tracking this metric back in 2011. with that tight supply and strong demand we are seeing prices continue to rise. median interesting home price is up 6% year over year. a little bit of an easing up in prices than we saw in march. 6% is faster than income growth so again, prices are hitting buyers hard. one good sign in in, we saw a return of the first time buyer at 34%. up slightly from last month. remember, first time buyer isn't necessarily one of those young millennials. it could be someone who simply hasn't owned a home in three years. we do know that as people come out of those credit problems they had during the financial crisis they're starting to buy again. a miss, sales down 2.3%. back to you. >> a miss on existing, miss on

new home sales yesterday. last week we had permits and starts down. is the market turning? >> it's all about the supply, lack of supply. if you don't have homes for sale, affordable homes for sale doesn't how much demand you have for people, they can't find them. builders are not building that starter entry home we need. starts are down because they can't get enough people, they can't lower the prices because of higher costs of land labor and supplies. >> diana olick. we'll talk to spencer rascoff about that as well on the housing data. the retail route continues this morning. tiffany's, lowe's and chicos all falling sharply. but is concern for the retail sector overstated? with us here is j.r. enoughen and from jpmorgan the global market strategist. i was trying to link the tiffany and lowe's story, jan.

i think the common thread is that expectations were high going into both. for lowe's after home depot and for tiffany after the stock is run up this year, what happened? >> well, it's pretty tough out there in retail land. i think it's overblown, i don't think it is. we're seeing a strong consumer. not seeing it translate into sales and earnings for most of the brick and mortar retailers. the problem is that the business moves online faster than we can harvest it in the brick and mortar and the market share keeps going down for brick and mortar retailers. we have been seeing reports for 2 1/2 weeks they're not getting better. they're just as difficult as where the season started. whether you were in apparel or some place else. so there are winners. the winners turn out to be off mall, local. the winners turn out to be online. but they turn out to be traditional brick and mortar retailing. >> well, the winner was used to be home improvement. home depot comps was 5.5% and lowe's 1.9%. is it an execution difference?

what is home depot doing right that lowe's isn't? >> i have been a fan of home defoe for a long time. they have won the space, lowe's has not won the space. we see a problem with home depot being a better executioner, having all of the professionals and lowe's not. they're not winning that battle against home depot but that sector at least is stronger than the others we have seen report so far. >> so we're talking about a structural problem with a certain type of retail. does it reflect anything broader about the strength of u.s. consumer and can it be a cause of problems let's say retail layoffs? does it do anything to color your outlook? >> i think we have been in a long cycle and long expansion. you could have a minicycle in the broader cycle. so we're seeing a slow down in u.s. data, but not indicative of the broad slowdown or the end.

if you look at inflation, goods inflation versus service inflation, there's a big diversion in the two. so the goods have to be related to the service sector. look at the service sector it's strong and vital. >> it does seem like you have the ingredients in for a positive consumer environment. you have unemployment at the lowest level since the recession. wages starting to pick up a little bit. and household finances in better shape. >> i say that every day. there's nothing wrong with the consumer. however, that point on inflation is a good one. there's no way to raise prices in the sector's we're looking at in apparel across the board. you can't get a cost increase through. so your expenses go up, your business moves online. online keeps you from raising prices so it's really hard to make your top line. if you can't make your top line in retailing it's really hard to make the bottom line. that's not going to change going forward. we talk about inflation coming

back. but it's not going to come back in prices at the end users pocketbook. we're going to see deflation continue, not just driven by online, but mostly driven by online. >> samantha, lack of inflation in goods which is really i guess most of what's largely measured. does it change the outlook for the fed? how is it going to broaden out? really if we look at mall based retail or traditional specialty retail, a pretty small percentage of the s&p 500. >> i don't know if it has -- it's related to the idea that the u.s. has been overretailed in the past so you're having a natural correction which doesn't have the material impact on growth. i think though that the fed has been transparent in how they think of the inflation and the unemployment rate, but you have to go deeper. looking at core pc is not telling us the whole story.

yeah, we haven't seen heat in the economy. so i think we really need to reassess the relationships. i think the fed is doing that. they have just been cautious about changing the messaging to the market because this is what we're used to looking at and focusing on. >> isn't the biggest reassessment in terms of jobs? i mean, we got a little taste of it in some of the job losses in retail. you wonder how much more of that is to come in a sector that employs the most amount of people? >> it's a pertinent answer to that. is retraining part of this? and then you get into the industrial policy. can the government be involved with retraining and diverting works to what's the new sectors because arguably retail is not growing. >> so give us -- >> you won't see it grow either. >> go ahead. >> go ahead. give us -- >> you won't see it grow because what happens is as you move those businesses online they're more efficient. they use less people to produce the same product out to the

consumer and so the store loses an employee. three or four times the rate that you put the employee into the online system. so we're going to continue to see erosion. even if sales were better we'd see erosion in retail employment. that's not going to change for a very long time. >> all right. we'll get some picks with you next time. thank you. when we come back, china dealt a credit rating blow today and a possible tax battle may be brewing between china and the u.s. we'll give you those details. and shares of intuit are moving up in a better way. we'll have more straight ahead.

moody's downgrading china's rating, they cited concerns over the growing debt. and china's finance ministry said that the downgrade was based on a quote inappropriate method and suggesting moody's was overestimating the difficulties that china faces. kind of a familiar debate there. been one of the big bear stories for a long time in the world. too much debt building up in china. world's too dependent on chinese growth. not a lot of debt held outside of china for the government -- >> no. held by the chinese. people feel they're not tracking it properly, what's offered by the life insurance companies,

for example, but through the banks, you know, it's not completely transparent. >> right. >> it's been growing fast. very quick. >> i think the point is that moody's isn't on to anything new and the rating agencies are completely late. >> flay are backward looking. >> might be an important threat but the quote that i mentioned that jim cramer was referencing from worldwide exchange was from paul donovan of ubs saying one of the credit ratings -- rated it to something else, and made fun of it. but if you look at the hang seng, the shanghai comp also brushed it off as well. >> if you rate countries, you have to have benchmarks and standards. this puts them solidly below the top tier in terms of moody's anyway. granted it's not a market moving call, but an acknowledgment of, you know, potential risks there.

>> and none of us expect that moody's is going to come up with the smoking gun when it comes to debt. >> watch iron ore prices. not rating agencies. >> there are things to be f focused on when its comes to china. and china, a possible tax war could be on the horizon as the tax plan may have an impact on china, specifically on its manufacturing sector. our eunice yoon has more on that story. eunice? >> hey, guys, i'm at an apparel company in china. just like where you are, everybody here has been talking about whether or not president trump is going to be able to get tax reform done. the reason for that is because if president trump is able to make good and follow through with a large corporate tax reduction, that could have a big impact on manufacturers like this one. now, i have been in and out of factories all week. i was speaking to one owner of a textile manufacturer who is investing $220 million into a

plant in south carolina. and he says that he hopes at one point to be able to move his entire business to the united states. the reason is because of cost. he was telling me as well as others have been telling me that contrary to the widespread perspective that the u.s. isn't necessarily a good place to do manufacturing, they are saying that it is a very competitive place. so this is what analyst told me about this trend of chinese companies investing in the u.s. >> these companies are going to the u.s. because they think by doing so they can lower their costs of production. in certain pockets of the u.s. the land will be much, much cheaper than china. the electricity, natural gas, believe it or not the logistic costs. >> and it's true that wages in the u.s. are still higher than

in china. but other costs help to offset that including taxes. already the tax -- the tax rate in the u.s. is lower than in china and in fact one executive told me that even if president trump were able to bring the corporate tax rate down by 5%, that would help the u.s.'s competitiveness for a lot of chinese companies. now china's government has been indicating that it's concerned about the impact on the manufacturing sector and it was only a month ago that the state media was running stories about how it can create international chaos if there was to be a tax war among companies and china for your guys' information is already looking to cut its corporate tax as well in order to remain competitive. guys? >> all right, eunice, thank you. eunice yoon reporting on a lot of different tensions obviously between our country and china. not perhaps as much at the

beginning of the administration we thought there might be. >> it's an interesting idea that made in china could become made in america. as eunice mentioned it only works in certain sectors like textil textiles. not so much in apparel. >> you wonder how the playing field rhetoric plays into that. the chinese company can buy a company, manufacture, do what they like. maybe we don't have reciprocity with american manufacturers. when we come back, intuit finding tax season success. the ceo brad smith is going to join us next and taking a look at stocks as we head to break, the s&p 500 continues to hang remarkably close to that 2400 level, it seems like we're back to the quiet pace as we were six or seven days ago. we'll be back after this. so what else is new? how's your mother?

umm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird. and the wolf huffed like you do sometimes, grandpa? well, when you have copd, it can be hard to breathe.

it can be hard to get air out, which can make it hard to get air in. so i talked to my doctor. she said... symbicort could help you breathe better, starting within 5 minutes. symbicort doesn't replace a rescue inhaler for sudden symptoms. symbicort helps provide significant improvement of your lung function. symbicort is for copd, including chronic bronchitis and emphysema. it should not be taken more than twice a day. symbicort contains formoterol. medicines like formoterol increase the risk of death from asthma problems. symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. you should tell your doctor if you have a heart condition or high blood pressure before taking it. symbicort could mean a day with better breathing. watch out, piggies! (child giggles) symbicort. breathe better starting within 5 minutes. get symbicort free for up to one year. visit saveonsymbicort.com today to learn more.

welcome back to "squawk on the street." intuit reporting earnings after the bell yesterday against the back drop of the president's first budget proposal. the company posted better than expected results and raising the guidance. the stock is a winner today, up

over 8%. jon fortt has brad smith, the ceo, in an exclusive interview. >> good morning. quite a quarter and quite a year you have had. the stock is up nearly 40%. overall, growth in tax returns is slow. to do it yourself category, turbotax's category was flat and yet you still managed to get more money. i think you were up 9%. what is it about the ways that people are making money in 2016 that allowed you to do that? >> thank you, jon, for having me this morning. one thing doesn't change regardless of what's happening with the number of people filing returns. everyone wants more money with little to no work and have complete confidence they got it right. we have been working for years to make it the best. using artificial intelligence, using the power of mobile devices and this year we saw our customer grow and we saw our revenue grow. so we'll continue to stay focused on what matters most to customers regardless of what ans

in the macro environment. >> interestingly, you had a half million more people than usual use your software. but then print out their returns and send them in because of some anti-fraud provisions that the irs implemented. did that seem to fix a big part of the fraud problem and do you expect to see more of this printing over the years or is this more of a one time anomaly. >> well, this was one of many things that we have done as an industry in partnership with the federal and the state governments to get cyber criminals out of the tax system. the particular issue you're talking about this year is if a new customer did not know the prior year adjusted gross income then they couldn't electronically file their return. they had to sprint it out and send it in. we had half a million people do that. i don't know if that will sustain in future years. so -- >> brad? >> yes. >> i want to point out on the other side of the screen next to you, brad, sorry to interrupt, we are looking at president trump and first lady melania trump. they have just arrived in

brussels. they're there for the nato meeting. this is the european portion of the first trip abroad. he'll be talking to nato members tonight and then meeting with g7 finance ministers later in the week. we'll keep watching this. and also keep talking i think to brad of intuit. which is an important story today. >> absolutely, brad, please finish your thought. >> yes, i was going to say that while we did this year have about half a million people who had to process their returns with software, and then print them out and mail them, we'll work with the irs and the states next year to automate that. but we're continuing our fight against cyber criminals and i think it will get more secure over time. >> this quarter in a lot of ways quickbooks accounting product, the self-employed, sort of stole the show here. what is driving that growth boast domestically and internationally? is it maybe main -- mainly uber

and lyft drivers? are you dropping the economies as folks in india -- i know you're looking at for self-employed start to adopt this product. >> well, jon, you put your finger on it. this is a secular trend. the estimates are 34% of the workforce are self-employed. that number is supposed to grow as high as 43% by the year 2020. and whether it's uber and lyft drivers or task rabbit or doordash or a carpenter or an artist, these are people who work every day and they have to separate the personal from the business expense and file their taxes. we have a break through solution that unables them to do by swiping left or right and we've doubled the number of customers in the last 90 days. this thing is on a tear. >> tax reform is a big subject in washington, d.c., right now. i know you're not a policymaker, but you have got data. what are some top areas where real people, real americans are

having trouble in tax law that really could be cleared up and benefit the economy? >> well, it could be summed up in one word -- simplification. we have been big supporters of tax simplification for years. i like what i'm hearing in terms of people saying we need to take this on this time and hopefully we'll get the tax code simplified. keep the power in the hands of the citizens to be able to decide what they want to file and at the end of the day, keep more money in the pockets of hard working americans. >> mr. smith, on the subject of taxes, i'm curious, you quoted as saying this was a hard fought tax season. what was hard and fought about it? >> well, david, every year we have great competition that comes in and they throw a few curveballs and this year everyone was on the game of free. free tax returns to file your federal as well as your state returns. now, that's not new to us. we have been offering free since

2004. but this year we had a lot of new competitors and existing competitors touting the same message so we had to stand up and show that our product was better than the altern etfs and i think we fared pretty well. >> but you pointed out that your share it seems in free was not as strong as it could have been. it's an area where you intend to improve. how do you do that? you had a mixed shift toward the high end which enabled that 9% revenue growth. but what are the sorts of things you can do to get the free users in the door and why are they strategically important? >> first of all, i would say that we are a little disappointed in our performance this year because we only held share and our goal is to grow share. the area we underperformed was the free customers. the way we win with free, the customers want the same thing. they want more money which is the maximum refund. they want to do it with little to no effort which means that easier to use product powered by artificial intelligence. then they want complete confidence they got it right so

that means we make sure we check for all the deductions and make sure they had no errors so we'll continue to lean in to product innovation and make sure that everyone understands that free is not all the same. you want to have the best solution that gives you the most money. and they're important because customers today who come in free over time their life will change. they may change earning income bracket and may become a paid customer. that's important to us. >> right. finally, brad, quickly if you can, give us an update on mobile. what percentage of people completed at least some of their tax return on a mobile device and are tab lets at all significant? we have seen sales of those kind of tail off over the last few years. >> yes. we had a significant portion, way over 50% who did some portion of their tax return using a mobile device. we're still getting extensions filed but the number is north of 6 or 7 million people who begin and ended with a mobile phone. this is an important way of

getting your taxes done and the more artificial intelligence and technology comes into play, more people will be able to do just that. >> all right. thank you, brad smith. death and taxes you can't escape them but you managed to make some money while helping people do it this year. we appreciate you joining us on cnbc. >> thank you, jon. good to see you. when we come back, if you think this market is unpredictable our next guest says there's one political event on if horizon that could make or break trump's streak. steven tananbaum will join us next.

good morning, everyone. i'm sue herera. here's your cnbc news update at this hour. pope francis meeting with president trump. his wife melania, son-in-law jared and daughter ivanka at the vatican this morning. a bit earlier the president and the pope held a nearly 30 minute private meeting. afterwards, the president was upbeat. >> he is something, he is really good. we had a fantastic meeting.

we had a fantastic tour. it was really beautiful. i'm liking italy very much. the prime minister, everybody. but we're looking italy very, very much. it was an honor to be with the pope. manchester police releasing a photo of the suicide bomber. sal man abedi. 22 people were killed and four people are now in custody. back here at home, another night of severe weather left a path of destruction across parts of southeast everyone texas overnight. a number of highways were closed and as many as 30,000 people lost power. that's the news update this hour. back down to you guys. >> thank you, sue. i'll take it. this afternoon, the federal reserve is due to release minutes ahead of its may policy meetings and investors are look for clues about rate hikes, of course and how the fed plans to unwind the balance sheet.

steve tananbaum is the managing partner and the chief investment officer and he manages more than $425 million across the credit universe. let's start here in our country. specific to the minutes, i mean, any thoughts about the unwind in terms of that balance sheet and what it may mean for the credit markets. >> right now the credit markets are complacent. they think it will be a perfect indy, a perfectly executed unwind. so we think that -- you know it's to be determined. but we think the market is assuming that between inflation and the gradual -- taking the punch bowl away that it will be relatively calm. >> you do? >> yeah. >> are you surprised just in speaking of calm of how calm the credit markets have been for some time? we talk often about the equity markets on this show and others on cnbc and what has been relative acquiescence if not a

nice move up. same for the credit markets. >> absolutely. if you work backwards and go how do you think the market would react if you had 1.5 to 2% growth for five, six, seven years with relatively modest inflation, how do you think it would -- how do you think the market would be it would be relatively calm. that's what we have had. it's just hard to believe that the market's going to continue to be that narrow in terms of gdp performance, and modest inflation. particularly as you look at the unemployment rate in the fours potentially going to the threes. looks like the trump economic platform is to raise nominal gdp which by definition should be inflation. >> it should be. how do you position your $25 billion portfolio or do you even care? i mean, is it of interest what's going on here necessarily when i know you're looking at the likes of bonds and argentina or mexico

or other emerging markets. >> sure is to look at the value that's currently existing in the market. right now it's a pricing in a really benign scenario. so we're looking for some more idiosyncratic opportunities because the broad markets we think are pretty tight. so you look at something like in argentina, you look at the provinces which are essentially the same risk as a sovereign government, but in some cases almost double the yield. if not 200 to 300 basis points more. so that's very, very attractive. you look at something like a pen ex, the same credit as a mexico government. it's a state controlled oil company of mexico. the 40 different issuers in pen ex, and they provide a lot of really attractive opportunities. look at a puerto rico which has a lot of different boxes in different opportunities.

>> we haven't talked as much as puerto rico as we might have. of course this enormous bankruptcy -- another way to put it, legislation that did pass through that allowed for a more orderly liquidation if you want to call it that. what's going to happen there in terms of the municipal bond holders and their recoveries? >> it's unclear, but we think that the budget that was put forth was kind of a sandbagged budget in what they can afford to pay for in interest. in fact, they have released a budget today that assumes very different inputs. notably on medicare payments than what they presented the creditors. but within that, probably the easiest box for us to discuss and we receive excellent value is puerto rico aqueduct and sewage company. >> okay, why is that? >> they charge half of what they charge in the u.s. and if you

look around the caribbean and other like economies whether it's in the u.s. or countries that would have a similar type of gdp is what the province of puerto rico has it seems as if it's appropriately priced if not cheap. it supports the debt. it's only levered at the senior level eight times. we have played in other water utilities of troubled issuers like jefferson county that currently trade at 14 times, at 14 times the leverage with only 5% -- currently yielding something like 4 to 5%. we see a lot of value in the high 70s going to the mid 90s if not par. on top of that, the governor has talked about certain entities, certain operating entities like prasa which they want to resolve within five months. >> it's a time line -- >> not like the more consequence shall discussions like the

geobonds. >> finally back to this market, is the high yield not attractive? >> it isn't. the value on a scale of a ten, a two or a three? >> why? >> it's more on price. you know, the economic back drop is fine. but right now, the spread given what potentially could happen, it's just -- it's no room for error. you take an environment like -- or an economy like australia where it's growing for 26 years, but yet within the past ten years you have had draw downs of 20% or more four times. we believe you're going to get priced -- you're going to get better pricing for the environment than what you have now. >> an opportunity to come in high yield but not there yet. thank you for your time. >> thanks, great to be back. >> steve tananbaum, founder of golden tree asset management.

existing home sales falling amid rising prices. zillow ceo spencer rascoff is with us to talk houses, taxes and more. looking at the stocks this hour we're back in the black for may. the dow, s&p and nasdaq were higher again for the fifth day in a row. gains though are still less than 0.2%. "squawk on the street" will be right back.

with stocks at or near record highs what is the one or two things that investors worry most about for a market down turn? we'll ask wells fargo strategist at tradingnation.cnbc.com, but more "squawk on the street" coming up.

the power of a low volatility investing approach. the power of smart beta. power your client's portfolio with powershares. before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus containing this information. read it carefully. distributed by invesco distributors inc. shares of deutsche bank are moving marginally lower right now, as house democrats seek new trump related records from the bank. eamon javers is in washington with the latest on this story. >> that's right. the key here is it's house democrats who are making this request of deutsche bank. they sent a letter dated may

23rd to the chief executive officer of deutsche bank in new york. john cryian. what they're asking for here are records related to deutsche bank's involvement with russia and also deutsche bank's personal involvement with president donald trump and his finances, if any. so what they're looking for specifically in this very long letter they say in furtherance of the oversight responsibilities, and in the interest of the public's right to understand the extent of the president's financial entanglements in russia, please publicly affirm that the bank has completed a thorough and rigorous review of both the 2011 russian mirror trading scheme as well as of president trump's accounts and those of his family members. they're asking for the bank the provide the committee with documents and me rows related to the -- memos related to the personal accounts of the president and his family. so something here that deutsche bank and the president probably don't want to turn over, being

asked for now by democrats on the house financial services committee. the key here though, this letter is signed by democrats alone. we don't see any of the republicans on this letter. so that indicates this is not something with bipartisan support up on capitol hill and it would be unlikely that democrats could force deutsche bank to provide those documents. but we have to talk to deutsche bank to see if they intend to comply with this letter or not. back over to you. >> yeah, looks like it's up on the house financial services website right now. we'll continue to wait for any developments on that one. meantime, the april tally of existing home sales fell 2.3% despite tight inventory. this comes after the 11% plunge in new home sales reported yesterday. is this a one month blip or a reason for concern? joining us here is zillow ceo spencer rascoff. nice to see you again. in person this time. so is this a story as diana olick points out of tighter

inventory, higher prices not enough to sell? >> there is not enough homes on the market. the homes are selling quickly and the problem is that home builders are not building enough entry level and mid level homes. land and labor costs are so high. so they're building more high end homes, fewer, but more expensive homes and that means there's not enough inventory. >> how does the inventory problem get solved? >> it's starting to get solved or it will be solved a year or two from now. the home appreciation is up and that will pull the homes up in value and that'll make it more economic for the builders to build a more mid level home. this is a seller's market so it's a great time to list if you're a potential seller. >> what do you see in potential buyer interest? so based on your site, are you seeing a lot of people, you know, kind of run up against this, that's visible in how they use your site? so i would just wonder if you're

seeing bottlenecks or people are discouraged and not looking anymore? >> they're looking but they're getting used to the new normal which is multiple offers. i mean, a typical home buyer is going to have two or three or four offers that they're competing against. sometimes 20 in certain markets. the other thing we're seeing in our data, people dual track now. look, i have $2,000 a month available for housing and, you know, whether i buy and that goes towards the mortgage or i rent and that goes to the landlord i'm sort of indifferent. that's a new phenomenon. >> as it relates to pricing you have news out of the company on zestimates. >> yeah. we have a million dollar contest to get people to improve the zestimates. we had a 14% error rate and now we have a 5% error rate. we're dramatically more accurate thanks to cloud computing and the question now is are there teams of stat usations and others out there that can improve upon that? we have taken a page out of the

netflix playbook here. improve their algorithms and we're excited about -- >> but you have a lawsuit as it relates to the zestimates from those who sold homes who don't think they're accurate and not getting the right demand. is this a response to that? >> no, this is not a response to that. we have been working on this or over a year. what a home is worth is what a buyer will pay for it. they look at the information on the web and there's a lot of human judgment applied on top of that as well and real estate judgment. there's no merit to that lawsuit that you're referencing. that's it. i'm not concerned about that. but the zestimate is always a starting point. we think by getting more statisticians involved we think we can improve it further. >> why not improve it through the operations of your own data scientist -- a core competency. >> it is. there are people working on voice recognition and using artificial intelligence on self-driving cars that are using a lot of the same strategies and

tactics and technologies as those that go into the zestimates. the academic competitions we are doing this in concert with google to help us structure the contest, they unleash a lot of creativity from other statisticians from other fields. >> what's the time line? >> about a year. want to enter? >> no definitely not my area of expertise. >> 5% is pretty close. how close do you think you can get given the ability of data given the idiosyncrasies of homes? >> we think it can be improved and the question is what other innovations, what other fields can be brought to bear? probably the area -- i guess this is a bit of a tell for those entering the con test. i think it's going to be hyper local. those using hyper local data sets, you know, we have been boiling the ocean. trying to value every home in the country. i think the more locally you the get, probably the better off you'll be. >> i have another question on the macro front. mortgage rates are going back down again so what's the impact of that beyond refinancing?

is it helping spur any sales? >> no. we don't -- at this point, mortgage rates have been kind of so low for so long, they go up and down a little. we don't think it's affecting the average home buyer overall. these are still so low, even when they got a little high and now they're back down again. it's not really impacting the home buyer. everyone who has refied -- most people who had equity in their home and were going to refi, have already refied. in terms of impacting home buyers i don't see much of an impact at these levels. maybe some day. if the mortgage rates go up a lot that can impact the home buyers. for now, it's not. >> spencer rascoff on the state of housing from zillow. let's go over to jon fortt. >> well, apple, amazon, facebook, google, which one of the five can you do without? we'll talk about why investors might want to think about that question. also --

i joined the army in july of '98. i did active duty 11 years. and two in the reserves. our 18 year old was in an accident. when i call usaa it was that voice asking me, "is your daughter ok?" that's where i felt relief. it actually helped to know that somebody else cared and wanted make sure that i was okay. that was really great. we're the rivera family, and we will be with usaa for life. usaa. we know what it means to serve. call today to talk about your insurance needs.

steve, other than making me move stuff, i'm here at the td ameritrade trader offices. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. see options data like never before. with thinkorswim only at td ameritrade. success stories from a top

president trump has suchtou down officially in brussels. he is there to meet with fellow leaders of nay fto and european union. this is the fourth leg of his trip having met with pope francis earlier today. he will be doing nato and his first g-7. he has been welcome with open arms, saudi arabia and israel. that was very much the religious portion of the trip. now, he gets into policy discussions. he once called nato obsolete during the campaign. he has since then said they are no longer obsolete but he has gone after some countries for

defense spending and he is coming into europe at a time of heightened alarm over terrorism where that is also likely to be on the agenda. >> do we anticipate there might be anything in terms of international markets or the eu that might come out of 234? >> not exactly for markets. always important to see how president trump is doing abroad, how these relationships go. so far, relatively smooth and the market has been relatively calm about the whole thing. certainly, calmer than last week when he was in town and all the comey news was piling up. >> the market seems very willing to treat it at largely ceremonial as kind of let's just focus on nonpolitics stuff while we can. that hasn't really stopped. you can look at what's been happening in terms of the news reports of these investigations. really, with the tax debate even as things are still going on, i think the interesting thing is you can play it both ways. you are seeing maybe some softening up by speaker of the house, paul ryan, saying maybe

we can do something on taxes without the border adjustment tax. who knows how you want to play it? to me, i think the market is happy to be free of these perceived policy influences for as long as it can. >> the question becomes what is the catalyst and what's driving this market. you have had a mixed read on economic data. we'll see what fed minutes show later this afternoon. earnings season pretty much over except for some retail losers in this case. >> a fairly good earnings season. >> good overall. then, you have some international data, which does look better. you also have oil prices, which could be a mover in the next 24 hours as opec kicks off its meeting in vienna, any word of extensions of the production cuts. 6-9 months is what people are buzzing about according to steve sedgwick. >> the markets are not there. the oil is going up. equity markets like the idea they are holding on to this

45-55 range. beyond that, yeah, overseas growth numbers, ecb hints and the fed. we are at 2400. >> we have been walking a tight rope practically. it has been approached so many times over three months, that either it is going to breakthrough and finally cause a rush of buying or it will repel it again and act as a ceiling for a while. that seems to be the market is trading very mechanically right now for better or worse. >> one group to keep an eye on later in the day is financials in terms of the fed. they are dependant on coming mark the questions to get them moving. ten-year yield, below 230. the yield is tipping a little bit higher. when we come back, amazon is hitting another all-time high today. its 20th record high of 2017. we'll talk bazos and the new new

york city bookstore coming this week. we will also talk to an early netflix investor and current board member with the stock and its amazing 15-year run. that's all coming up on "squawk alley" next. this is where i trade andrs. manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you.

but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. with it, i earn unlimited 2% cash back on all of my purchasing. and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... which adds fuel to my bottom line. what's in your wallet? will you be ready when the moment turns romantic? cialis for daily use treats ed and the urinary symptoms of bph.

tell your doctor about your medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, or adempas® for pulmonary hypertension, as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have a sudden decrease or loss of hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis.

welcome back to squuk "squa the street." material standing out as the best on the s&p 500. a number of steel stocks based on recent underperformance. keep an eye on those shares. let's send it back to the nyc for the start of "squawk alley." back over to you guys. good morning, it is 11:00 a.m. at amazon's new bookstore and 11:00 a.m. on wall street. "squawk alley" is live. ♪