epic finish in the nhl playoffs as the pittsburgh penguins face the ottawa senators in the finals, in double overtime. pittsburgh's kunitz gave the defending champs a 3-2 victory sending them back to the stanley cup final. the penguins are trying to win back-to-back titles. we saw gary bettman in the house. game one is monday night. i hope for nashville. >> folks, we are out of time. if you're going away for the three day weekend, enjoy your weekend. remember memorial day. right now, time for "squawk on the street." ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber and sara eisen at the new york stock exchange. cramer is off today. the market looks to take a breather here today. plenty to work with on the last session before the memorial day.

macro data, the president at the g7. europe's on pace for a down day. ten year, 2.23. durables are down for first time in four months. and oil still below $49. our road map begins with quote very, very bad. the president's comments on germany and trade are in the spotlight. >> plus amazon is near $1,000 a share. will that run continue? and the surprise gdp revision, higher for the first quarter. >> first up though the germans are bad, very bad, that's the what the president reportedly said in brussels. according to the german publication der spiegel. he voiced displeasure over the trade surplus. see the millions of cars they're selling to the u.s., terrible. we will stop this. a lot of discussion about what was lost in translation with the germans. gary cohn trying to clarify what the president meant on russian sanctions, but not the first

time that he has been critical of the trade -- >> and german out makers as well. cohn said he was saying that the automakers are very, very bad. not germany, the country. the truth is if you look at some of these german automakers, bmw chief among them, they said the largest plant is actually in spartanburg, south carolina, which is one of the biggest exporters of cars in the united states. it's invested billions of dollars in expanded capacity in this plant for years. mercedes and volkswagen also have plants in the u.s. so president trump is going to have a fight if he continues on this. >> yes. this rhetoric is more familiar to us from the very early beginning of his presidency. not that we afrnt at -- are not at the beginning of the

presidency. it's been quieter about concern about trade war. don't you think? >> it's been a little quieter. but you have the for first time the president attending g7. it's a major spotlight internationally. there are four new leaders at the g7 meetings in sicily, italy. it's president trump, it's the leaders of italy, the uk and france. all their first time meeting. they're not there to talk about trade. they're there to talk about cooperation on international issues like climate change which could also get testy. and terrorism and security, but clearly this remains a focus for this president. >> it's a bit of a new generation. there's some pictures circulating of macron and trudeau walking around the gorgeous vistas of sicily. and then there's der spiegel, sara, you pointed out an op-ed in germany. it's where they are when it comes to our president. >> this is one of the most scathing opinion pieces on trump and it's interesting it comes

from one of the biggest german papers. maybe not a surprise but after the comments saying trump must go. it's an editorial of course, but this is his first shot on the world stage. it's very different than the beginning of his trip in saudi arabia and in israel. and at the vatican. i thought i -- i saw a funny line on twitter that i have been talking about. he was beloved over there in the middle east because he's the anti-obama and now they're skeptical, the europeans about him. because he's the anti-obama. >> indeed. the president is gathering with his counterparts at the summit meeting in sicily. we have all the latest. good morning. >> good morning, guys. yeah, they started the conversations and they have been focused on foreign policy and clearly trade will be a big part of the conversation over the next couple of days and it's something that some people at this table really disagree about. president trump being criticized by the germans for some of his comments as you were talking about there. but there was a bit of a laying

down of the gauntlet by european leaders. jean-claude juncker wanted to talk about the unity amongst the leaders. let's listen to what he had to say. >> we stand up here as we are always doing for our shared values of freedom, democracy, and rule of law and respect for human rights. we do believe as europeans in open societies and we are always seeking multilateral solutions. we want to build widgets, not walls. >> that seems to echo a criticism from angela merkel in brussels. she talked about isolation and building walls being bad news. not what makes the societies in places like europe successful. it's more about staying open. obviously that's something that means a lot to european leaders here. and another issue that matters to them of course is russia. and they have repeatedly over the last year or so since the last g7 said they wanted to keep

the sanctions of the european community and the community has on russia. however, gary cohn talked to reporters saying that the president didn't have a position on those russian sanctions. >> willem marks, thank you for the updates from gorgeous sicily at g7. we're approaching the end of another historic week for stocks. yesterday marked the s&p's 19th record close of the year. already more than last year's total of 18 record closes. for more, let's bring in peter ja keymy from cantor fitzgerald and a chief international economist. we got a new batch of the data. first quarter in the rearview mirror looks better. but what about the second quarter? >> there were some residuals from the first quarter and that colored both the regional feds and that should result in the

gdp growth being substantially higher than in q1. we are pleased to see the upgrade today. that it was half a percentage point higher than we previously thought. it was not a great quarter but the rebound should come in q2. >> a rebound in q2 still not as good as expected. cnbc did a tracking update with moody's, it declined to 0.1% from the previous reading. the economic surprises have been coming in negative. >> absolutely. that's been one of the surprises that the market has done so well, it's surprising to see the various measures they all measure the same thing and the economic data didn't do so well in q2. but we're very optimistic. that's what the fed has been saying this week that, you know what, just look through this. the minutes said look through this. just see if things will continue to improve going forward. >> is that why the market has remained resilient in the face of some weaker economic data? >> i think the market is disconnected from fundamentals. the last time i was with you

guys i talked about the ecb and monitoring how aggressive both the boj and the ecb were going to be coming into this year. in fact, between the two of them, there's $1.2 trillion of balance sheet expansion. let's not forget they're not just acting on benchmark rates. the boj is buying equities and the ecb buys investment grade. in particular ecb buys something like investment grade it affect risk premium globally. if you can't get yield in europe, you migrate down into em. >> you're still saying we're high on opium to some degree? >> we need to look at the other global central banks. >> when do you expect them to turn or do you? >> it's interesting, there isn't a real reason for them to turn. >> except for pmi is running at the six year high. >> fair enough. i think what ecb in particular is concerned about is the german election. and the maintenance of stability

into the german election. mr. draghi won't do anything until around or after the election. i think they'll talk about taper over the summer to test the markets. >> a lot of people are pinning the rally to better earnings and especially if you look at the growth names like technology that's in the lead. the nasdaq is up another 2% this week. >> attribution is wonderful and when we talk about the previous comps very easy comps across the board. >> what do you make of this new range we're in about 2400, and yet the ten year's -- the curve is telling us something quite different. >> i know, as peter just said that's been driven very dramatically by the money printing abroad. but the good news for the market look at nominal gdp growth as sara mentioned real growth will be around 3.5, 4. if you add 2% inflation to that you should get an earnings

growth that's rising with gdp significantly. it's probably going to be around 5er o -- 5 or 6%. >> so you're optimistic. carl mentioned the global pmis at multiyear highs. do you think they're peaked? >> i think it's looking good. the market conditions in both europe and the u.s. and globally are doing quite well. we have some issues in china, the system is starting to work here and there. but generally thinking it's steady as it goes in the europe and your area. >> the chief economist made some comments this morning, peter, that japan and europe obviously performing better than some thought. that our own hiccup does not change our overall trajectory, and if there's a worry spot it's china. >> i think torsten and agree -- i agree.

china is worrisome, but they're doing everything they can do to control the yuan volatility. china is the biggest risk for this year. aside from policy error perhaps in europe. >> feels like that's the biggest risk for every year. peter, thank you so much from cantor fitzgerald and torsten of deutsche bank. when we come back, the road ahead for amazon. the stock within 4 bucks or so of $1,000 a share. we'll look at the premarket. yesterday's was the 19th record close of the year for the s&p. surpassing the 18 we got in all of 2016. back in a minute. hey ron! they're finally taking down that schwab billboard. oh, not so fast, carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity...

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♪ watching shares of amazon again close to breaking $1,000 mark. the stock is up over 32% so far this year as it continues to dominate retail. the cloud business and the expanding content business. weighing in on the way forward for amazon and bezos is jeffrey munser. >> hi, hello. >> we love the big round numbers and people like to dispute, well, just for splits maybe

going at got there first, but how important is this? >> it's a trophy. it's going to be a nice feather in the hat for jeff bezos who is behind a lot of the other large cap companies. you know, the stock has had a phenomenal performance. 2014 investors really didn't believe that this company would be profitable. i think missed the true punch line of amazon which is the opportunity ahead of it. which we can talk about here. but it's just a nice trophy for him. >> yeah. do you believe there's some risk in whether or not they can grow margins in the back half of the year? >> no, not in the back half of the year because the comps get really easy. you recall in the beginning of 2016, they spent a ton of money on investing and so essentially it creates some easy comps. i think they'll grow through the comps in the back half of the year. i think the margins longer term is an issue for the company. i think that investors shouldn't be worried about that.

and here's the real stat that i want to leave with people today. is that 8% of what is bought globally is bought online. i think most people would think that number is a lot higher. this gets back to the margin question. but ultimately we think that that number could go to 55%. so when you think about these depressed margins, i think investors should be reminded about just how nascent online is today and it's the right thing to invest in the business. >> gene, i mean, the stock has been so positive recently. i would love to hear from you -- you seem to be disputing even the larger risk of margins staying fairly compressed. what is a risk then from your perspective? you know, conceivably for a company that's dominating online retail as you say. has a profit machine in awes, has logistics figured out how to

get stuff to us within hours and making great inroads in home entertainment. >> yeah. i think obviously somebody buying the stock at $1,000 they're hoping it goes to $2,000 so i think the opportunity again is the market share in online, that's an increase and it would put amazon at $1 trillion in revenue if they get to that. that's assuming they maintain their market share. another piece they're changing how retailers are approaching it. they've gone up to 47 prime cities in the last year alone. and so i think when you put those together i think the opportunity here is still the fundamentally change how consumers think about retail. >> but david asked specifically about what could stand in the way, gene, and is aws one thing, the fact that it's been so competitive that maybe you'll see lower prices across cloud, google wants in a very

aggressive way. is that one of the key factors that could get in the way? >> yep. david, i apologize, i missed that. but the risk is aws. obviously there's a lot of hope from investors that that could be a huge segment. it's 9% of revenue to date. the specific reason is azure from microsoft is gaining share, and google is making a big push within that. so that's an area that amazon had an early lead on but is not maintaining the same market share they had in retail. that's the risk to the story. >> well, yeah, specifically to the profit component overall. i mean, aws given the much higher margins than the rest of the business has a -- even though the revenue number may not be as large, gene, the contribution is far larger. that's not an insignificant risk that increased competition from microsoft and google. >> it is a measurable risk, when you put it in the context of the other forces we talk about it's

a risk. >> would there be other favorites on the spectrum above amazon? >> there would. tesla, a controversial story. people don't understand what this company's mission statement is. their mission statement is to accelerate the globe's transformation to renewable energy. when you start thinking about that you can see them grabbing market cap from energy companies which are some of the largest market cap companies and so i would pun intended here buckle up. this is going to be a bumpy but positive ride for tesla in the years to come. >> how much is contingent are on whether the capital markets are accommodating for elon? >> well, that is -- i would say it's a third of needs to be -- they need to be supportive. this vision is so big, that it will take a lot of capital to get there. i think they have structured reasons why others can't get there. i'll give you one quick example,

this race for batteries, there's a problem about just the elements of the copper and the nickel to build the batteries and they have procured some of that. if someone wants to build the batteries, they need financing to get there. i think the markets will give him that leverage to build this future. >> gene, interesting connection there between your at least thesis on tesla and amazon's early days when people saw it as a bookseller and it had really nothing to do with books the ultimate vision. is there a connection between the two and the future they both hold in terms of the way that investors viewed them earlier on and what they have as their true ambition? >> definitely. i mean, that's also a big connection to where apple was ten years ago. in terms of a visionary leader, in terms of a story that is still i think misunderstood by investors. like you said the amazon story, apple at its time was about the ipod. and in this case, with tesla it's about the cars. so i think when you have these

visionary leaderships with capital and some angles where the competition really can't maneuver fast enough, think about traditional automotive and their ability to transform their labor force. i mean, some structural challenges that these competitors have. i think it's similar to what amazon went through too. >> there have been some very concrete examples of that in the past week. jeep, good to see you. have a good long weekend. gene munster. >> thank you, have a good day. still to come, pulitzer prize winning columnist jim stewart with his perspective on the stock market and where the quote, trump effect fits into the picture. look at futures, still lower for the dow, down 10. the nasdaq is positive. it would be a seventh day in the row if we do see gains for stocks. much more "squawk on the street" straight ahead. 't become a guitad just by playing air guitar.

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s&p's and it's four times the dow's. for the month. >> it's also the outperformer of the year, up 15%. you know, the journal looked at the amazon price tag of $1,000 per share. something that other big tech names are near as well. their spin on it was it shows how out of vogue the stock split is. gene munster just told us it's a badge of honor. i guess they're not cater doing the smaller retail investor anymore with the sort of high priced stocks. they don't split anymore. >> no, they don't. i can remember a time of course during the dotcom craze in the late 1990s that the investor base was so unsophisticated they thought there was some positive created by a stock split in a real way other than twice as many shares. but you're not seeing it as often. even when you do it's not necessarily sending stocks higher as in the brief but crazy period in the 1990s. the stocks were hitting triple and quadruple points quite often. >> we'll keep on eye on amazon

today. yesterday, even though it was a fifth day up, volume was pretty light. 3 billion shares. down volume was more than up volume which you don't see on a day where that's usually gain. >> you saw staples and utilities outperform along with technology so there's a bit of a defensive quality and tone to this market. yields are still very low. so that could be a part of it. you also saw oil get crushed. oil was down almost 5%. yesterday it's a big reason why some of the big global markets have underperformed and are negative on the week even though the s&p 500 is up for the week. energy was a big drag on the s&p. it looks like oil is going to rebound a little bit. the other market mover i would point to is the british pound which is weakening sharply. the spread is narrowing for theresa may and the conservative party, two weeks to go before

the election. five point spread. that used to be ten. so that's some uncertainty there. >> it will be an important two weeks as the residents of the uk wonder whether or not the tone of the election or the campaign will change after the bombing in manchester. there's the opening bell and look at the s&p at the bottom of your screen. at the big board this morning as we already said, the disabled american veterans in honor of memorial day. our hats off to them as always. at the nasdaq, national hockey league commissioner gary bettman celebrating the stanley cup final beginning on monday. we haven't gotten to the big retail names. ulta, gamestop. >> i'm glad you mentioned ulta first, because that's the headline retailer outperformer. i know cramer loves this stock and for good reason. where else are you seeing comp store sales up 14%. that's what ulta beauty posted in the first quarter. it's the loyalty program.

which makes this company especially attractive. keeping them insulated from amazon. oliver chen was asked on the earnings call how they're staying away from the amazon effect. they added 1 million people in first quarter to the loyalty program. they have got 25 million. they give away free birthday gifts. this one, david, was the big lash mascara. lashes are very in right now. >> okay. >> one of the beauty products that's driving this tremendous growth in this beautiful stock chart. >> absolutely. what i know i know from cramer who has obviously spoken about it quite often. the selfie craze being part of it. people want to know their best at all times. >> he knows selfies, i know lashes. >> yes. >> buckingham saying trying to imagine 35 times and beyond was difficult and there was a discussion about gross margin weakness. but again, ulta with the beat on both the top and the bottom

line. guiding a tad below consensus. costco comp's up five. 140 beats by nine cents and more discussion about the business models that are not amazonable. of course the ever present discussion of the annuity business that is their membership fee. >> they had very strong sales out of the u.s., such as their -- which is their biggest market for the wholesale chain. a lot of people -- some analysts are criticizing the online sales. this is a theme with costco and whether they're doing enough to invest in e-commerce. it rose 11%. coming off a quarter where walmart's grew 69%. target's online comps grew 22%. so that's a going to be something to watch. but clearly costco living up to the very good reputation on wall street with better comps and better sales overall. steve actually to your point, carl, did a survey about amazon customers and costco memberships and whether there was overlap.

they said there was a lot. a lot of people have both of them, but unlike many other retailers costco for some reason wasn't getting cannibalized by the amazon memberships. people are buying different stuff in bulk in each of the sites. >> that is interesting. if cramer were here and he wasn't talking about ulta and costco, he might be talking about gamestop. the comp's up 2.3. this nintendo switch drives hard ware to the upside. new video software sales down 8 year on year. mobile was a little bit weak and that's why gamestop is down 8%. >> we'd transition to the conversation about esports as well and how important that is. microsoft making an entrance there also. of course the big winner is amazon yet again. we never mentioned twitch, for those who like to watch esports which may be perhaps impacting the likes of the gamestop to some extent. on the subject of media not that

we were talking about it, i want to mention viacom which signed a new deal with altease, which controls both cablevision and sudden link here in the u.s. about 3 million or so subs. they have not had the viacom networks including nickelodeon and mtv on sudden link for some time. they got tossed off a while back. they're going to be back on and they have signed a new carriage agreement dealing with both cablevision and putting the channels back on sudden link. the stock had a nice move yesterday. that being viacom i believe. also some talk about another ott product. this time from viacom in some way. although it doesn't appear to me they have a robust enough group of their own networks to populate their own ott offering. but that's where we are these days. everybody wants to come up with them, either be a part of ones that are put together or even create their own.

for its part, cbs, for example, all access has about a million and a half viewers for that digital service. >> and in tv news, "game of thrones" final season, six episodes. a bummer. >> just six episodes? >> yeah. >> it starts this summer right? >> i don't know. >> july or something. >> just got word of that. they're looking into other -- >> there's -- july 16th or something like that "house of cards" is next week on netflix. >> that's a tough one to compete with reality people are saying. guys, we have been talking about the dominance of big cap tech. i thought i'd highlight this chart that came from bank of america merrill lynch this week. you might criticize it because it looks at the size of the tech companies relative to gdps of metropolitan areas. it's not quite apples to apples but it gives you a sense of the size and the scope of how

ginormous the tech companies are. besides new york and los angeles which are your biggest gdps, you have apple right up there. along with google. you have amazon and facebook behind houston. you have some of these tech names bigger than the size of the chicago economy. just thought that was interesting at how big -- >> interesting comparison, yeah. i haven't seen that one before. >> yeah. the stag sort of got some brushback on twitter, comparing the valuation to the gdp number, kind of weird. right? >> of cities too. interesting to see new york is double that of los angeles. >> but i think it highlights just how big these stocks -- just how big these companies have gotten as their stocks have soared. they put out this list actually a few days ago. i had to readjust all the market caps which are much higher than they were three days ago to get in there. there it is, david. new york, l.a., apple. google, chicago. >> new york, l.a., apple. their new building is almost the

size of a city itself. apple built it for billions of dollars. i'd like to get a tour of that. either one of -- we haven't seen it yet. right? >> no. >> i'd like to get in there. tim, any chance? maybe? >> maybe cramer can get over there. >> oh, yeah, he will. >> he has good access. >> disney leading the dow. the laggard is ge this morning. which is one of the more poorly performing dow components of the year. i'm reminded of the anniversary of the dow jones industrial average. the dow was 40 -- 4-0. and ge was one of the original components, along with american cotton and tennessee coal and iron. >> the only one still of course. >> yeah. >> it has had a tough week, a tough year so far, down 13.5%. the latest being perhaps a tweaking of some guidance for earnings at a conference earlier this week from ceo jim immelt

who continued to say there's some toughness in certain markets that the company has. particularly oil and gas. >> yeah, they called it a soft walk back of 2018 target of 2 i believe. >> that's right. their focus as well on cost cutting. and therefore increasing margin. and there's going to be a lot of attention paid to ge i would argue in the second half of this year which is not far away. certainly given the presence of the activist trying in their shares and given the lack of performance in the overall stock. and they are going to be quite focused my understanding of course on their ability to cut costs on their targets for cutting some of the overhead from the company. it has $1 billion in costs. >> that's why i asked torsten of deutsche bank if global pmis have peaked out. i think there's a question out there about where the global economy is headed coming off a period where we have had a synchronized improvement. that's driven the market up, but

also coming at a period where we're watching the u.s. economic data very closely because we have had some key misses. >> all right. dow's down 18 to start the morning. let's a get to bob pisani on the floor. >> happy friday, carl and everybody. a little bit of a breather, let's look at the sectors. remember the market leadership. it's been technology and to a certain extent bank stocks in the last week. it's ooet -- you see they're pulling back a bit. oil is below $50 so a little more defensive. staples and the utilities leading this morning. we have had a six day tear, not an awful lot of news. remember what happened the 17th, the markets were down 370 points in the dow. since then, look at this, the dow transports is up 4%. this is in a week. nasdaq up 3%. new highs, s&p is up 2.5%. even the russell 2000. lagging a bit versus their big cap guys also up 2%. this is in a week, folks. now remember the stock market isn't a person, but it

definitely has moods to it. they go -- the market goes through moods. right now a clear mood in the market. i don't want to hear it. i don't want to hear about the problems that are out there. so for example, on the trump agenda slowing down, we know the comey russia issues aren't going away. they can't get the health care passed. the oil is not cooperating, below 50 dollars. we had oil at 52 weeks low yesterday, i don't want to hear about it. we had choppy q2 economic data, not q1. today the revision on the gdp was better. no matter, we have had people taking down g 2 gdp estimates. i don't want to hear about it. bottom line themarkets want to go up. this is a very, very powerful market. you heard the guys and sara talking about the retail. i want to focus on ulta because people say 35 times forward earnings you have to be kidding me. even some of the analysts are moving to the neutral position,

but this is a new high for ulta. i do think it is certainly justified. look at the numbers here. sara mentioned the same-store sales up 14.3%. that's a remarkable number. but that's a blend of e-commerce and brick and mortar. e-commerce was up 37%, but the brick and mortar sales, the store sales were up 11%. that's remarkable given what all the other retailers are doing. now we look at retailers in a couple of different ways. you want to know how many transactions there are. how many times are they ordering? up nearly 9%. what's the price, what's the ticket price? it's been going up too. maybe they're rising prices, maybe people are buying more. these are great numbers. finally you want to look at the earnings trend. this is why i think this 35 multiple that the stock's trading at right now might be justified. take a look at this concern right here, since the last four years we have seen roughly 20% earnings growth for ulta every single year and they'll do

almost $10 for 2018. in this particular case, i think these valuations are justified for ulta. back to you. >> you didn't even say anything about the lashes, bob, but i agree -- >> that's your department. >> the enthusiasts like to touch and feel and sample it. thank you for highlighting. for more on today's movers let's get out to bertha coombs at the nasdaq. >> thank you. the nasdaq notching a new all time high, but amazon continues to be the power here. yesterday, topping out at 999, a dollar shy of the $1,000 mark. but amazon would not be the only one in the four digit category were it to hit that number. if you ask alexis the highest priced stock is priceline. and not far behind chasing that four digit number include alphabet. but really it's about size here

at the nasdaq. when you talk about impact, what has been moving this market towards all time highs. it's the biggest -- big cap techs. facebook, alphabet, amazon, of course. they represent 60% of the nasdaq 100s gains year to date. and nearly 40% of the s&p 500's gains so far this year. back to you. >> a big part of the story. thank you. let's head out to the bond pits, rick santelli at the cme group in chicago. >> good morning, sa ra. you know, there hasn't been a lot of volatility with rates but that doesn't mean there's not good activity and that you shouldn't pay attention. it's at a level that's barely hanging on with respect to what traders think could bring in more buying, maybe reversing the short positions. look at a one week chart of tens and we were affected by the minutes. but all in all, if you look at tens were down two on the day.

we're up one on the week. if you look at the twos, we're up a couple on the week. not far from unchanged both on the weekly and on a daily basis. look at the april 1st of tens. this is what i meant about pay close attention. we are only seven basis points away from testing the low yield close of the year right around 218. keep that in mind. sara, you talked about the pound today. let's show one week of the pound. you see that pound versus dollar the drop, well the drop might be some election risk. the horrible events in manchester really put many issues back on the front burner that could tinker with at least the lead that existed, not that many hours or days ago. if you look at a one week of the euro versus the dollar, you can kind of see that trump effect there. as we see some of the german automakers take a hit as year. the euro doesn't look bad, but looks like 112 could be the new address for a while and a chart

that many traders are looking at almost as much as the dollar index this is kind of the fear gauge in reverse for the fixed income markets. it's the high yield etf. that's a year to date. the highest level on the chart. as a matter of fact, it's the highest level since july of 2015 and the reason i bring it up is if that keeps going up and the spreads keep narrowing, don't look for a lot of nervous trade in the fixed income space. carl, back to you. >> he said as the vix is close to a single -- nine handle, once again. thanks very much. when we come back a look at this week's retail winners and losers and which names in the sector are most likely to withstand the amazon juggernaut. dow is down 22 on this friday.

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with a miss. tiffany posting disappointing sales but costco, big lots among bright spots. is the worst over for retail? we are joined by a managing director and patrick mckooefer, joining us by phone. oliver, i'll turn to you with amazon flirting at $1,000 a share for first time ever you have some retailers like ulta and costco fighting back. you asked this question on the ulta conference call about how ulta's doing it. what did you learn? >> yeah, i would say ulta's doing an excellent job adding new brands such as mac and a lot of innovation in mobile. as you said, beauty is experiential, so the innovation in the beauty category requires some in person experience as well as the training and the sales support. so they're doing a great job of merging bricks and clicks and thinking of mobile in stores and adding new brands and taking share from department stores. the macy's experience in terms

of beauty is different from ulta. when you walk into the ulta which is kind of like a home depot for women, it's a mixed service experience so you can buy items by yourself instead of being serviced by someone behind the counter. that's very different. on the topic of amazon -- >> i want to ask you, are you still a buyer? it's trading at 33 times the earnings. >> we still like the stock. ulta's -- it's a great place to be, because as you know the mall has been a tough place. we're calling for 20% of the 1,200 malls to be repurposed and there's a lot of store closures happening so in many ways, ulta is the amazon of beauty with very good brands. >> so patrick, what is your big take away out of the retail season? we have been talking about some winners. we have to mention best buy yesterday. are the winners the exception or some strategy forming of how the retailers can compete and

succeed in this environment? >> hi, sara. i think the winners are the exception here. i cover 15 retailers. mostly in the discount store space, but also sporting goods and a few apparel names. and i have only got six buys so i'm being very selective. they're all names that i think can compete with amazon or very differentiated from amazon, like five below, aldi's, big lots this morning. it's difficult out there. the story was you know very, very tough february. some of that from later tax refunds. then a decent rebound in march and also in april. but probably not sustainable at those levels, so overall, yeah, it's very difficult out there and as tough as i have seen it really in my coming up on close

to 20 years covering the sector up. >> sure. >> guys, we have to leave it there. to make up for time, but thank you for weighing in on what has been an important retail season. oliver when and patrick mckooefer, happy friday. >> thanks, guys. when we come back, mark zuckerberg's message to harvard grads. dow's down seven. fees? what did you have in mind? i don't know. $4.95 per trade? uhhh. and i was wondering if your brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $4.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab.

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it was a homecoming of sorts for mark zuckerberg. yesterday the facebook ceo received an honorary degree from harvard 12 years after dropping out. in his commencement address he floated the idea of universal income and sounded political. >> we have to deal with tens of thousands of jobs replaced by automation like self-driving cars and trucks. but we can do so much more than that. every generation has its defining works. more than 300,000 people work to put that man on the moon including that janitor. millions of volunteers immunized children against polio and millions of more people built the hoover dam and other great projects. and now it's our generation's turn to do great things. i know, you're thinking i don't

know how to build a dam. i don't know how to get a million people involved in anything. well, let me tell you a secret. no one does when they begin. ideas don't come out fully formed. they only become clear as you work on them. you just have to get started. >> that was a big part of his speech. talked about this notion of a eureka moment that we think founders have. doesn't really exist. if it did, people would be wondering where is it and they'd never start their project in first place. >> and they do write on glass. i thought that was a very good line, in the movies of course, people are coming up with the formulas and writing on the glass. like that doesn't really happen. interesting he referred to them -- everybody as their generation. just reminds you how young this man still is. that he can talk to graduates of college and say, yep, we're still the same generation. >> talk to graduates and did something i didn't, which is

graduate. probably one of the most famous dropouts at harvard. i don't know. he competes with bill gates. >> james earl jones there. >> is he running for president or what? >> he said in a facebook post no. but he does want to visit all 50 states. >> universal income? >> yeah. >> which is actually trendy. elon musk has been talking about that as well. >> when we come back the president making the harsh comments about germany and the trade surplus. we'll get more reaction to that with the dow down eight points. don't go away. are you ok? what happened? dad kinda walked into my swing.

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♪ good friday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, david faber at the new york stock exchange. after a long week of gains the market a little more mild down. the dow is down 11 points. still watching the president at the g7. some macro data too. >> our road map for the hour starts with the president's trade clash. trump threatening to halt german auto sales tone the u.s. we'll go live to the g7 summit in sicily. >> amazon continuing its climb towards $1,000 a share. how far will it go?

is it time for a split? we'll discuss. plus president trump's push for a wall along the border. is it time to build a mall there? we'll tell you about a group investing $100 million in the very idea. first up, we have gdp revision and now let's get to rick santelli. >> yes, absolutely. this is our final read from the university of michigan sentiment. we take the 97.7 mid month and we toss it out and replace it with 97.1. so 97.1 is the number and sequentially if you look atlas month's final it was 97.0. so we beat it by at least a tenth. to give you a little perspective the high for the year was january at 95.5 and february at 96.3. that 98.5 by the way is a long time before you take that out. that's the highest level since january of '04. quickly, 2.6 is the one year of inflation in unchanged.

we gained a tenth, 2.4, versus 2.3. carl and the gang, back to you. >> thank you for those breaking confidence numbers. overall in the markets despite policy pit falls in washington, markets and investors continue to hold steady ignoring the political uncertainty around the promised tax reform and deregulation plans. for more, we have joined from fidelity investments and paul chryst -- christopher. there's big uncertainties over the promised policy optimistic growth points that we were looking forward to, like tax reform and deregulation. is it that the market wasn't pricing that in or it's still optimistic about it? >> i think the key thing to remember is that since the first quarter of last year we have been this this global synchronized reflation. and the promised fiscal policy

changes in washington really don't take away from that. right? so this is a self-sustaining global upturn that is driving earnings higher. that's what's driving the markets higher. you know, the right kind of fiscal reform is icing on the cake. it can extend our cycle although the wrong kind of reform can shorten it if it brings the fed into play. but we don't really need fiscal for the markets to go higher because we have a global tail wind of a global reflation led by china and that's been really the big story fundamentally driving stocks higher for the last you know five quarters or so. >> well, paul, do you agree with that assessment? it would be the icing on the cake if we got only actual pro growth policies out of washington? >> if you got the pro growth policies out of washington i agree it would depend on the kind. if you had deficit driven tax

cuts, raising inflation on the borrowing costs you would undermine the very stimulus you're trying to put out there. it's more than just trump onomics and the idea of the liquidity you have out there in places like japan and europe that are beginning to have an economic recovery and something to do with all that money floating around. >> what about the amazing run that technology has had as a sector, as the nasdaq has outperformed on the week, on the year. you name it, is it overheated? >> that's always a big question and in 2000, the tech and -- the telecom sector got to be such a large piece of the market that when that inevitably turned down it really took the market with it. you know, now i think the p/e levels are a lot more normal and the share of those stocks is

less. so therefore, even if it does turn it's less likely to pull the markets down as much as they did, you know, basically the last time. having said that, a lot of the rally this year in the s&p can be attributed to just a couple of stocks and that obviously you would like to see a broader participation and if you look at, you know, the s&p, just at the russell 2000 which is more of a pure play on the washington agenda, it hasn't -- it has gone exactly nowhere for six months. it's back to where it was at the first week of december. so a lot of the market is actually not moving at all. while it's sort of waiting to see what the next chapter's going to be here in the u.s. >> yeah. paul, flat lining for three months. but at the same time, the average and the median s&p name is down fractionally. which has some people wondering whether active management -- if we have shifted away from passive and more to the active management environment.

is that true? >> yeah, we think we are seeing the beginnings of some better performance out of active management. we look for that to continue. this is a part of the cycle where earnings growth will slow and it's going to be more difficult and more challenging for valuations to try to pick up from here. we might see more historically average valuations going forward which can limit gains in the future. >> we have been watching these pictures, these photo-ops out of g7 today, yesterday from nato. and president trump's -- some of the media narrative goes is receiving a frosty reception especially from the european counterparts. why don't investors seem bothered by the fact and the fact that he's still raising protectionist language as its relates to german carmakers. >> yeah, it's tricky because we get all the headlines and the tweets and this and that. the analysis out of washington and on the political stage, but ultimately for the markets what i think matters is obviously is beyond the fiscal side in the

u.s. is clearly trade and the key meetings that we have seen so far with for instance the chinese leader and other leaders have been pretty benign if you will. and so we -- you know, the headlines notwithstanding, we haven't really seen anything materialize that's directly anti-trade and unless we start seeing that, you know, i think the market's can sort of chug along. i think the bigger story as i mentioned earlier is really china here because china conducted a credit impulse as we call it. we are coming off the tail -- off the other side of that. where china started to tighten at the margins. so it's a very difficult -- it's difficult for me to see upside economic surprises at this point because we have just had this huge surge in credit. and i think that really is the bigger story for the global economy as long as the actual results from these meetings with

foreign leaders doesn't result in protectionism which so far it hasn't. >> you're not the first to warn about china actually as a risk to the markets. what will you be looking forward to see if this rally can continue the sentiment data? what do you need to see? >> the markets really need to see a continuation of the tail wind that there's a globally synchronized improvement in growth. we need to see u.s. data continue to improve for the second quarter. and into the end of the year. we need to see europe and japan not stumble. we need to see if china's return to reforms is going to slow that economy by a considerable amount. that's something we have been watching carefully. if we see any signs that the combination is less optimistic than the market currently expects. we could see a reversion back to the historical medians that i was mentioning a moment ago. that's why we're advising our clients to take the opportunity to take some profits and to

rebalance. recycle that money into better values and then really take the opportunity to take profits in those -- and those names that have done well here. >> but for now, second quarter gdp is tracking 3%. we'll leave it there, guys. thank you. >> thank you. >> retail earnings parade continues today. a week of highs and lows for the sector. you have gamestop, costco and ulta beauty out with numbers. let's get to courtney reagan. >> hi there. the retail earnings are ending stronger than they started. ulta beauty, the earnings soaring past consensus on stronger than expected revenues. the ulta salon grew 10%. that's one future that's unamazonable. but the management says it owns 1% and 4% of the total beauty market. it believes there's runway and opportunity ahead. the one draw back for investors of ulta, the current quarter

forecast is short of investments. costco like amazon proves that consumers are with willing to shell out for memberships when they deem it's worth it. the wholesale club beat the street on the profit and revenue results for the fiscal third quarter. remember, that's a metric that we still get monthly from them, plus it's logging a strong 90% renewable rate even despite 12 higher races. the software sales fell thanks to the new nintendo game switch console. they didn't up the guidance, just reaffirmed it. some i don'tment on the street there. like ulta and costco, game stop grew comparable sales. analysts had expected a drop. and decker is the parent of ugg and teva, surprising investors

with a profit instead of a loss. revenue is expected with the full range guidance higher, no update though on the strategic alternatives for that name. carl, back over to you. >> yeah, it's weird when some of the top gainers and losers of the week are in the same sector. interesting, courtney reagan. when we come back, we'll go to the g7 in sicily. overnight the president said that germany is quote, very, very bad when it comes to trade, calling out the auto sector in particular. we have the details. watching shares of amazon of course. sitting $997 and change. see if and when that crosses $1,000 when "squawk on the street" comes back.

president trump at tending his first g7 summit today in the final leg of his foreign trip as the president threatens to stop german car sales in the united states. our willem marks has the latest from sicily. >> yeah, good morning. they have been in meetings in the last few hours. the organizers say they have been focused on security issues and foreign policy. clearly trade a big part of these conversations as well though after those comments we heard from president trump talking about german automakers. another thing on the agenda of course is going to be really focused on migration here. according to the italians that's something they want to put at the top of their agenda. sicily where we are right now is ground zero for the migration crisis coming up from north africa and european leaders really hoping to impress on president trump the western

values. we heard from jean-claude juncker about this morning. let's take a listen. >> we stand up here as we're always doing for our shared values of freedom, democracy, rule of law and respect for human rights. we do believe as europeans in open societies and we are always seeking multilateral solutions. we want to build widgets, not walls. >> as you can hear, quite a heavy security presence here in sicily. there's a helicopter passing overhead right now. but that dig from him at president trump is one that angela merkel had been saying in brussels and she talked about how isolationism is not a way to build successful societies. and of course they'll talk about russia. we have heard about that. and particularly sanctions here. european leaders saying that it's very important to keep

those sanctions in place against russia. however, last night on air force one gary cohn speaking to reporters saying that was something that the president was looking at. he had not formed a position on that. >> willem, thank you. willem marx talking nicely through the helicopter noise. for more on the g7, let's bring in a cnbc contributor, former economic adviser to vice president biden. good morning. ben, we have been saying since the campaign the market would have to learn to read both the rhetoric and the policy. is this another test of that? >> i think the markets are doing a good job. president trump's comments on germany were certainly inflammatory but the markets have largely shrugged it off. there's an economic back drop to the comments. the april trade figures were not what the administration wanted. the deficit and goods -- the deficit up to $67.7 billion but as you can see the markets

aren't anticipating any sort of actual blow back. we have seen this before with china. the threats of a currency war, trade war, what did we get? a trade deal. >> jared, do you see it the same way? >> i do. i think ben's exactly right that the markets after leaning over their skis much too far in terms of believing the trump agenda was going to get legislated next week are finally recognizing that's not the way it works. that said, when donald trump talks about trade there's often a germ of something that's the true in it. i completely agree with ben that the inflammatory approach is antithetical to the g7. however, the fact that germany has a trade surplus of 8.5% of gdp of their gdp is actually a problem in europe. and that's not just me talking. ben bernanke has said that, lord mervin king, former governor of the central bank of the uk has made that problem. it's a problem especially for

weaker countries in the periphery when one country has a trade surplus, others must mirror that in large trade deficits that have hurt their demand situation. >> the german government spokeswoman addressed that and said it's a fact of the of supply and demand. surpluses are not good and they're not evil, nothing to do with that. but jared, i have maybe a legal question for you. can president trump do anything? make it's economic. can he do anything to block german cars from coming to the united states as was threatened? >> i hate to say it, but i believe he can. i mean, the president can pretty unilaterally raise tariffs on a narrow set of goods if he makes a case they're unfairly dumping. this is case of what ben was talking about. trump threatens things like that but they don't come to fruition. there are saner voices within

the administration pushing back. >> well, ben, at the beginning of this administration there was a lot of fear about a trade war that seems to have died down substantially. do you think words like this if there's more rhetoric from the president is going to once again exasperate those fears? >> look, it doesn't help and we'll see more of it over the course of the weekend. we have got a lot of conflicts with our g7 partners. not just on trade. but on security as you know. on climate change. on migration. on international regulation, taxation, a whole slew of issues. but the market really right now is concentrated on the more mundane issues like corporate earnings which are great. first quarter corporate earnings are up 13.6% from a year ago. best pace in nearly six years. as long as president trump doesn't show us evidence that he's going to follow through with policies that are going to disrupt international trade, the markets are going to keep pushing it up. >> there's also -- >> i have long said that the best thing that trump administration can do for this

economy is not screw it up. >> well, to that point, why would he even risk annoying the companies that are employing workers in tennessee, in south carolina, as sara pointed out earlier, alabama. those are huge employers in his base states. >> and exporters. >> sara asked me to do some lawyering, now you're asking me to do psychotherapy. getting inside donald trump's head is not something i want to do on a friday. what he's doing over there is consistent with his america first. meet donald trump, that's what he does. >> so are you saying, ben, that the frosty reception he may or may not have received at nato, the fact he's brought this america first policy to organizations like nato and g7 which is completely antithetical

does it ultimately matter? >> it matters but it doesn't matter necessarily immediately. >> to investors. >> when we talk about things like nato, and our article 5 commitments to our allies there, that is to mutual defense, this does matter particularly when conflict between the united states and russia is growing. we could have further russian interventions in the ukraine, possibly in the baltics. and the europeans are very nervous about how the united states is going to react. >> spicer later came out and said of course he supports five -- it would be ridiculous to say he doesn't. >> as an administration, clearly the guys like to speak out of both sides of their mouths. they have different audiences. and donald trump was clearly speaking to a domestic audience. his base here. and then he's going to use people in his administration to sort of smooth things over with those who are concerned about

it. >> one of the things that's happening here -- and i have talked to lots of foreign diplomats about this, is that the ministers of the g7 are learning how to listen to donald trump. historically, those ministers took what the american president said very seriously. that can't be the case with donald trump because as ben was saying, he says something in the morning that may be completely different than what he says in the afternoon. so it's very important for these diplomats to learn to speak trumpism because it's not the same thing as obamaism or clintonism or anything like that. >> all right. a lot of americans think that's a good thing. jared, thank you for your time. ben, good to see you as well. >> come back with a few more degrees. >> i'll try. all right. when we come back, amazon continuing that climb, it is nearing a record $1,000 a share. how high will it go? and is it time to split the stock? we'll discuss that and more when "squawk on the street" comes back. i cot on my demall siss aor

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amazon continuing to hit new highs, edging ever closer to the $1,000 a share mark for the

first time ever, but will amazon ever join the dow? deirdre bow is a has been looking into that. good morning. >> good morning, sara. two things preventing that from happening any time soon, first, nearly $1,000 a share it's nearly four times the price of the currently highest priced stock on the dow. that's goldman sachs. it's 36 times the lowest, ge. since the dow is calculated based on price, it would throw the index all of out whack. it would have to split and that's something it hasn't done in 18 years. also, bezos said he had no plans to do so. secondly, amazon has never declared or paid a cash dividend and every dow component does. so it's unlikely that amazon will follow suit. bezos has never been shy about using cash to reinvest in the

business. another reason for amazon to hold out is the so-called curse of the dow where they underperform their replacements at first. finally, entered the dow, then the company fell 17% over the next 12 months and nearly two years for shares to hit another record high. the stock it replaced at&t it popped 17% the year after it actually left the dow. guys, hitting $1,000 a share puts amazon in the exclusive club that includes just four other stocks. but it also puts the stock further out of reach of entry level and ma and pa investors. splits attract nonvalue investors some argue. >> deirdre, thank you. what a chart. talking some amazon today. when we come back, the president's threatening to halt german car sales in the u.s. we'll talk about that. buy or sell, why politics may move the markets but rarely for long. pulitzer prize winning journalist jim stewart will join

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good morning, everyone. i'm sue herera. here's your cnbc news update at this hour. president trump meeting with japanese prime minister shinzo abe at the g7 meeting in italy. high on the agenda the situation in north korea. president trump is spending two days at the g7 meeting. republican greg gianforte has won the special election for montana's sole u.s. house seat. he was elected despite being cited for misdemeanor assault after slamming a reporter to the ground. he apologized for his actions. >> i made a mistake. and i took an action that i can't take back. i'm not proud of what happened. i should not have responded in the way that i did. and for that, i'm sorry. overseas police in manchester, england, searching

another property today as part of the investigation into monday's suicide bombing which killed 22 people. police cordoning off the street to conduct that search. that's the news update this hour. have a great long weekend. >> thank you very much. and to you too, sue. well, president trump is threatening to end german car sales in the united states. at least that seems to what he said. phil lebeau has more on that story. phil? >> david, let's set this up. this was reportedly comments that president trump made while meeting with leaders from european countries and a meeting yesterday in europe. it was reported by a german magazine that he said, hey, we're going not allow germany to import any vehicles to the u.s. we never heard that confirmed. gary cohn the chief economic adviser for the trump administration was very clear talking with reporters afterwards saying he didn't say that he hates germany or germany is very bad. he's just not happy with germany when it comes to german trade. so it brings up the question,

what do we get from germany in terms of automobiles what do we export here in the u.s.? if you look at imports look at the dealers and look at the show rooms. the high end sedans or the high end cars that you see there, those are the vehicles that we're importing from german automakers. last year, 846,472 autos imported from germany. that's about 4.8% of the u.s. sales. again, they primarily focus on the high end models. well, what about the suvs and the crossovers that you see? oh, those are built primarily here in the u.s. we have been down to the bmw plant in spartan burg. when you look at the u.s. auto production remember that the german automakers have been expanding here in the united states as they expand production of suvs and crossovers. long, volkswagen has its new suv coming out in tennessee this year. look at shares of the german automakers and the implications for them. certainly would be enormous if we saw some type of a trade

battle or a tariff slipped on german made vehicles imported to the u.s. one other thing to keep in mind, the german automakers have plants in mexico or are building plants in mexico. another dynamic in the discussion about whether or not there should be tariffs slapped on german brand autos sold here in the u.s. >> yeah. well, phil, it should be pointed out, sometimes the president's language can be somewhat torturous or tortured with his syntax. i guess gary cohn talked about it, do we feel confident in that? >> as confident as you can be in anything. what is first said and reported often seems far more ominous than what ultimately happens. >> yeah. thanks for the update. as always for the insight. phil lebeau on the german carmakers. investors are continuing to watch the trump agenda overall and the policy priorities that are coming out of washington.

but as our next guest says deciding whether to buy or sell, well, that shouldn't be based only the day of political fluctuations. joining us is pulitzer prize winning author jim stewart. the upcoming trade war -- >> i say ignore that. one point i will make though, if you want to hear from the republican base, put a big tax on german cars. i noticed today that mercedes-benz is still advertising on the sean hannity show. there's a reason for that, they're the core customers. that aside, i was shocked when i looked back on the historic research on the market how little effect even major political upheavals have long term. by long term i mean a year. yes the day of the week the month, sometimes there will be a dramatic move. but if you're not a short term trader it was amazing to me they almost never have a year long effect. i was like 11 major incidents

that jim stack looked into, starting with pearl harbor, the nazi invasion of france, 1940. assassination of jfk, only two out of the 11 had any effect a year later. that was the german invasion, pearl harbor. that was a minor move and the jfk assassination, the market was up 20% a year later. selling after september 11th was one of the worst times to sell in recent years. it was up 20% by the beginning of the year. the same thing with the debt standoff in 2011. so if anything, you have to do something when that's one of these collapses, like there was, you know, a week ago over the russia thing. you should be buying. but my advice basically is just tune that out. it may be interesting politically but unless it affects fundamental economics. >> that's what you should be focussed on. there's belief over time that it can lead to beneficial economic growth or the opposite which would impact the market.

but you're saying that's where you have to say focused not on the actual day to day politics or geopolitics. >> the fed has a huge impact on whether the markets go, but trump's dealings over russia, will have that an effect on monetary policy? i don't think so. so you can cross that one off. what about fundamental economics, people are saying, well, constant turmoil could dampen some of this high level of consumer confidence, ceo confidence. and then maybe you'd see a decline in consumer sentiment. that's getting pretty tenuous. i don't think there are any immediate links here between this particular crisis that's swirling around and fundamentals that would move markets. >> one thing is we're so awash in political news there's sort of deflation and political value. everything is -- it's sort of raining news on us so it's hard to know what matters anymore. >> well, it is. it's also -- you know, there are these professionals out there, these macro traders who, you

know, their full-time job is to try to translate this massive political data. and then invest on it. but the macro hedge funds have been doing terrible lately. they had a terrible year last year. they were the worst performing subset of the hedge fund industries. if they can't do it, then -- i don't think the rest of us should be trying to mess around with that. >> jim, to take the other side, the reason some strategists say that the political noise ultimately will impact the markets and the economy is because it could endanger tax reform and deregulation. which are clearly two major policies that could impact growth in the markets. >> yeah. that's true. "a," i don't know that it will. at least in theory the republicans marching ahead on these things and saying that you know they'll get something done. maybe they will. i think though the market is focusing mainly on, you know, corporate earnings, broad economy growth, which is moving

ahead. even without these things. and i think the market is already discounted the likelihood of this going in there. a lot of the enthusiasm in the banks you have already seen kind of seeping out of stock prices. i think the market is already discounted that a fair amount. now, one legitimate concern that people bring up we are in year nine of a bull market and i think it's worth remembering there has never been a bull market that made it to year ten. now, there's always a first time. this could be it. nobody sees any eminent problems on the horizon, but you are seeing higher valuations, this is getting long in the tooth. this is not the time to bet the family farm on stocks but it's not nevertheless because of the scandal du jour. >> the president will be appointing a new head of the fed. one would expect that to have an impact. >> well, yes, absolutely. but it's like again, appointing a new head of the fbi.

who is this going to be and how different are they going to be and it's got to be somebody that can get confirmed. i think there are certain basic resume requirements for these jobs that the president really has to respect or they're not going to get through. i don't see some huge change in fed policy even if trump does change the head of the fed. >> well, certainly the market action proved your point. we recouped all of the deep losses that we saw last wednesday. how does this market feel to you right now trading at record levels for the s&p and the nasdaq, the stunning outperformance of big cap tech? >> you know, i feel comfortable with it. i think, you know, that i heard somebody else on the show saying like rebalanced. follow your plan. that's what i'm doing. i think when it hits in highs it's time to check to see if things are out of line. but i don't see any reason to make any big adjustments right now. i mean, corporate earnings are coming in very well. consumer confidence remains very high.

despite the -- you know, the avalanche of political news and upheaval. people are, you know, going about their jobs, finding jobs, working, spending money. i think it looks great. somebody said we won't have 25% gains this year but we could have 8, 10, 12 for several years and if we keep the trends going the valuations -- >> the people in your story remind me of what shiller said on the air this week. that is valuation could go a lot higher. >> absolutely. it has gone a lot higher before the markets. >> it has. jim, thank you. jim stewart. take a look at the stocks at this hour. wow. down one point. it is a tight range today on the dow. we'll watch that. also send it over to our jane wells in laredo, texas, for a look at what's coming up next. >> hey, this is the border that's mexico. there's the rio grande, sales tax receipts are down along the texas border towns but two developers have built a huge

outlet mall because in texas, you either go big or go home. that story is next.

it may already be at a record high but will netflix rise another 20%? that's what one trader said. more "squawk on the street" is coming up.

♪ dow's up less than a point. the s&p and nasdaq are positive. let's go out to rick santelli and the santelli exchange. good morning. >> thank you. good morning, i want to welcome the last guest of the week, and bob's my health care guy. bob, thank you. and even before we -- let's get right into it.

rearview mirror, what's the postmortem on obamacare as we get into repeal and replace? >> well, it's in big trouble. we are seeing big rate increases we seal see substantial rate increases this year. the number of insurance companies have said they'll withdraw. we are concern about some markets not having an insurance company. but the debate is not over whether obamacare is in trouble or not, but the debate is over whose fault it is. because the trump administration has done a lot to undermine the law. it's the combination of the flaws that the law has had and the trump administration willing to see it blow up. those two things will make it a very rocky next few months and next year for obamacare. >> well, bob, let me stop you there. boy, i hate when it goes into politics and i understand why. so if trump wasn't president, would obamacare just have been flying fine all by itself without any issues related to it? >> no. if hillary clinton were president today, we'd still be seeing substantial rate

increases. we might even see some wi withdraw withdrawals. let's say it was a democratic congress they'd have to figure out low to fix this. >> oh. >> so really if i wanted to get political in this, bob, not that you are, but if i wanted to get political in this, basically, we could say to give both sides the same kind of punch in the stomach is that the democrats would have had to have done something and electing donald trump kind of the ty cobb of politics takes them off the hook, doesn't it? >> well, it does. they can now -- one of the things that's obvious is trump has made himself a pretty good target for the democrats because refusing. >> no, i get all that. it's so defeatist. we see there are issues now let's look forward. the two things i see, i understand how the budget and health care are linked. was medicaid design tobed to be

medicaid health vehicle? >> no, it wasn't. now we have about a fifth of the country on medicaid. that's one of the things that drives the republicans, particularly conservative republicans crazy here. they would consider the expansion of the democratic welfare state and they look at this period where we're revisiting obamacare as the one time when stars are aligned. they have the white house, the house and the senate, that they can start to roll back the expansion of what they would refer to as the welfare state. that's really at the crux of much of this obama repeal and replace. trying to move away from medicaid, move people into more private sector insurance plans. >> and really, wasn't that part of the linchpin that really wasn't covered adequately in obamacare to begin with? that that became a big bucket? is that not kind of true? on medicaid. >> well, without a doubt the expansion into medicaid is where most people in obamacare have gained coverage. now, one of the dilemmas here,

rick, this is important for everybody on both sides of the spectrum to understand, by far the cheapest way to expand insurance coverage for poor people is through medicaid. it's primarily because it -- the reimbursement for doctors and hospitals -- >> no, it was working well. the real issue is what to do with the middle class, is it not? >> well, it is. i mean, the problem with obamacare is that the subsidies don't really help middle class people. half the people in the obamacare insurance exchanges that get individual health insurance don't receive a subsidy. they're commonly paying $1,000 a month for health insurance plan with a 6 or $7,000 deductible. it's a two pronged thing that the republicans are trying to tackle. what do you do about the medicaid expansion, and the second part is what obamacare has done to the middle class while obamacare has helped low income people in the medicaid

expansion it's a disaster for those who don't get the subsidies. >> well, bob, we're out of time. i have to stop there, but it looks to me like everything you said is true. now the republicans are making it the reverse issue. both sides need to get together on this one. thank you for your expertise. i always learn something talking to you, bob. thanks and have a safe memorial day weekend. david, back to you. >> okay. thank you very much. rick and same to you. let's send it over to jon fortt. >> well, ahead of the long weekend, david, big tech is hot. near all time highs. we'll take a look at the stocks and whether they have farther to go. we're also going to dig into this trade flap with germany. president trump abroad doing some diplomacy, ruffling some feathers. we'll talk to the former deputy commerce secretary about that. all that and more coming up on "squawk alley." the comfort in knowing where things are headed. because as we live longer... and markets continue to rise and fall...

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president trump remaining determined to build a wall along the border with mexico, but two groups don't seem bothered and are spending $120 million to open an outlet mall right next to it. our jane wells is there in laredo, texas and joins us with more on this story.

so, jane, a border mall. >> reporter: very good. but will the mall hit a wall? this is a huge gamble by these two publicly traded developers. this massive outlet mall counting on shoppers coming in from over here, across the rio grande, mexico. this is one of the busiest border crossings in the country. laredo is the largest landport in the americas with $200 billion in goods moving through each year. who knew? but 40% of the city's economy is based on mexican shoppers. and talk of a border wall which would have to go down the middle of the rio grande is bad for business. >> there's uncertainty, there's fear. not as much as before because i think good rhetoric is now reached the border area. >> there has been lower people from mexico coming because of the whole donald trump thing, but they have money, they like to spend, they come. >> reporter: which brings us to the outlet mall built by cbl and

horizon group properties. opened in march. close to 80 stores. the city kicked in millions in incentives. so how's it doing? >> i can't give you numbers from retailers because they don't allow that. but the center itself in two weeks did over $4 million. that's a lot of sales. our company actually owns the johnny rockets restaurant. we own four of those around the country. we've never had an opening like this. we did $178,000 in three days in sales. that's a lot of hamburgers. >> reporter: now, outlet malls have been outperforming overall retail in part because it's a destination. and so laredo's actually offering incentives to mexican travel agencies to get people to come up in buses and make a weekend of it. guys, as much as they're concerned about the fear factor created by the president's rhetoric, they're also concerned about the weak peso. back to you. >> certainly a factor. this reminds me, jane, of san diego. don't they have malls near the

border there? >> yes, they do, but san diego is a bit further north. you've got national city right on the border, but brownsville, el paso and laredo, these are the border towns where you walk right over the bridge and go shopping. you don't even need an i-94 form to get further in. just a basic visa. and one interesting thing here, 40% of the transactions at this mall are in cash. that's twice the norm. and an indication that those are shoppers from mexico. >> jane, in your piece you mentioned the wall would go right down the middle of the rio grande. is that actually what they're thinking about? >> reporter: well, no. you see the river there? that's the rio grande. the border between u.s. and mexico is right in the middle of the water there. it would be impractical to put a wall. do you put it on the u.s. side? you've left off some of your property for mexico. put it on the mexican side, they're not going to do it. it's not quite clear, you can see here there's a border patrol. they have a fan boat they get

ready and go out, they have their trucks over there. it's not quite clear what's going to happen here if they come up with the money. but you'll still have that bridge crossing over for people legally to come here and shop. the problem is it will create fear. it sends a bad message, according to the mayor of laredo. and people may get mad on the mexican side say if you want to do that why would we go there and shop even though they like the brands at the outlet mall at lower prices than they can pay for back home. >> all right. jane wells with a geography lesson with us as well. >> always. >> at the border in laredo, texas, thank you. when we come back, the former deputy commerce secretary and former vice president of ford, bruce andrews, is with us. we'll get his take on president trump's new trade threats and more. taking another look at stocks at this hour. dow's down about 13 points being weighed down by ibm, s&p is pretty much unchanged. staples showing some strength helped by costco. energy stocks are lagging even though oil is higher. "squawk on the street" will be right back. my business was built with passion... but i keep it growing by making every dollar count.

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several hitting record levels, marriott hotels, ulta beauty, royal caribbean making fresh record highs. check out shares of microsoft in record territory as well. and for those watching amazon, the number here 999 to notch an all-time record got to get above there. we'll watch what's happening there. on the flip side, signet jewelers, we'll watch those names for sure. that does it for "squawk on the street." let's send it back downtown for the start of "squawk alley." back to you guys. >> dom, thank you very much. let's start off "squawk alley." it is 8:00 a.m. in seattle, 11:00 a.m. on wall street and "squawk alley" is live. ♪ ♪ feels something like