and another look at the markets. i'm going to washington for you, make sure you watch us "squawk on the street" going down to the swamp. 'squawk on the street is next. ♪ >> good monday morning welcome to "squawk on the street." i'm karl the dow seeing a 200 point gain as earnings season gets in gear. investors respond to friday's missile launch in syria. europe trying to shrug off losses retail coming positive after three months down. and we begin with stocks

shrugging off syria's strikes. netflix, after the bell tonight. >> founder and ceo announces his resignation effective immediately over the weekend. >> and reprehensible and wrong kevin johnson apologizing amid backlash after two black men are arrested while waiting at a philadelphia store first up, stocks on track to open higher on the hopes that the u.s.-led missile attacks on syria will not escalade. the focus returning back to earnings the latest bank posed better than expected results. and government data showing that retail sales rebounded in march. up .06 the largest increase in november largely because we've not been able to put a positive number together for three months. >> i think people will assume finally we've got tax reform news i think it's not begin to happen until april.

that is fantastic run down of retail last week you get the sense that the spending is back i think it's the first number that jives with what we're hearing. before this, there was a perception that something is going wrong with the consumer. i take that retail is good auto is good it's a little surprising and, remember, no one is saying that housing is bad. there's a constraint that a number of houses being built if housing is good and retail is good and auto is good. it's hard to say that the consumer has gotten weaker. >> yeah. we saw some slippage in the survey data at the conference board in michigan. but year on year furniture up.39. building and garden supplies .53 as we get into what you would like to call christmas for home depot. >> yeah. tractor supply up. costco really nice upgrade today based on the fact that things

are starting to pick up both with membership and also sales i think that we haven't heard from home depot or lowe's. it gives you a better story to buy retail the negative in retail, just so we know, had been the tariffs that are going to raise prices the chinese tariffs. obviously, that is something that discounted that was being discounted in the last few days. so, therefore, if there are no tariffs put on retail, and particularly private label, or if the companies can switch the sources away from china. you have a compelling story to buy retail. >> switching your sources away from china is not the easiest thing. we're nowhere near having the answer on where things stand with tariffs. >> stocks are starting to discount. >> yeah. >> we saw on friday after the conference that maybe things will go against the apparel

companies. >> and, of course, the retailers. but then jeff bought a ton of stock after he spoke to jpmorgan conference there's conviction out there by the actual retail. many tirico was telling me everything is great. >> yeah. >> gap scores not understanding evaluation of the stock. the confusion with the retailers is almost like the bank ceos who are completely confounded by why their stocks are -- >> i think both of us were probably going to go to that point. friday's action. we were here at this time on friday your expectations were stocks would be up. >> yeah. >> didn't do that. nor did the others this morning we have bank of america, as you can see, thatting loo thatting -- that looks up. revenue up 4%. expenses down 1%. >> that's a good set of numbers. >> not bad set of numbers for bank of america. >> i like that.

>> dij station is positive this is the internet of things is how everything plays out. the growth is incredible again, bank of america up 32 cents. now they walk it back. citi up 40 or 50 cents jpmorgan up 50 cents at 7:30 8:30 and then there are sellers coming in and just disliking the stocks i it not foresee that. i thought that when people saw these numbers they would like the initial reaction again, i want to stress how it was because the sell-off is really, really -- >> yeah. it went on was there anything in particular that caught your attention in the conference calls we don't often have the opportunity to listen to the calls since we're on-air oftentimes when they occur that can change the tone. >> i thought that pnc was stunning pnc talking about things are expenses going up when they try to move into the new areas obviously, they're regional going national they talked about wholesale

funding. you listen to their call, and then you listen to wells fargo which is basically says we're doing our best given the sanctions that have been put on us those were the ones that, i thought, brought down jpmorgan and citibank i can't stress how important pnc was. they were the ones that called out how disappointing their own numbers were they pointed a host of lines and i see pnc is up this morning. i would reverse this i would say wells shouldn't go up pnc should go down again jpmorgan should go higher. bank of america was excellent. citibank was excellent jpmorgan was so good if i worked at jpmorgan i would be sitting there all weekend saying can someone please tell me what happened this was the best number. >> data track had good stuff last week. looking at analyst enthusiasm with regarding sectors the average price target of financia financials is 14%.

the only thing worse is real estate agent and utilities the overall targets are not aggressive. >> and yet let's look at what happened two weeks ago two weeks ago today on the sell-off jpmorgan down to 108 you had goldman to 248 you had citibank at 6869 then they were rebounded to where they were. and the numbers you mentioned to me, people said all right we got good numbers let's revert a little bit to where we were. i come back and say this is selling at 12 1/2 to 13 times earnings you have clorox, proctor, kimberly, coca-cola. with less growth than all the banks you just mentioned i'm struggling with how the market is evaluating these stocks i think they have it wrong who is is a guy one or two

people to say they're wrong. i think when people come back, the big money comes back a few days from now they're going to say, you know, these banks when we see them compared to other companies reporting. maybe they've got consistent and less risky growth. >> right on that sujd it's worth mentioning bank of america net interest increased 13% driven by, of course, higher rates and stronger positive loan growth and that's just a start. >> you get $3 billion for bank of america and, remember, that's as close to risk free as it's going to come because that's people who have the deposits plus they also you remember they're lending a little bit more here is a good example this morning we get a double down rate of kraft heinz. >> we're going to spend a little bit of time on the report later. >> i want to say it's a buy to a sell over credits. i mentioned it because, frankly,

they sold 16. >> a lot more on the syria situation today. let's get to hadley gamble good morning. >> hey, good morning so essentially what we've been hearing over the last 24 hours here in the region, essential from the arab league, in particular, a lot of comment coming from saudi arabia they think that the u.s. strike in syria was a good idea but a lot of pullback from countries like lebanon and iraq. they're worried about the region there's a question whether that's going to impact i had a chance to catch up earlier today with egyptian billionaire. let's listen to what he had to say. >> i'm opposing the strike if you watch someone you give

the green light for people to do stuff like that. >> of course, that was egyptian billionaire. this is the man who owns the only tell comlicense he's involved in gold mining investments everywhere i think it's reflecting the broader sentiment in this region that something had to be done. whether or not this is going to move the dial forward in any way is anybody's guess guys >> hadley, thank you for that. hadley gamble for us of course, implications for the ruble and oil and gold today people are puzzled by wti's downturn in the midst of this. >> i think a lot of us were watching friday night to see

what happened. i think there was a sense once we left here something was going to happen. general mattis was restrained. it was almost mission accomplished but weary of the terms. but i do -- i came back and said, okay, that's limited but then what was the story the next day bashar laughing with his russian advisors i would think of all the people you don't want to taunt, it would be the president of the united states. particularly this president of the united states. i'm not thinking this is over at all. a lot of people felt one-and-done i think that's on friday we'll be discussing it again what is going to happen this weekend. i don't feel any sort of solis there. oil was up but i think oil had a premium this weekend getting back the premium. >> i'm finding market participates are focussed on the investigation by the u.s.

attorney from the southern district looking into the president's personal attorney's dealings, michael cohen, than syria. that's come up more than questions about the strategy is or what the impact will be. >> it was so aggressive. >> a lot of people questioning legality that's off the table it's a legal thing to do the government has done it before but the democrats, by the way, talk about illegality. how long did it take them to say it was legal for president trump to attack syria? we have congressional approval there's so much hatred on both sides. it's disconcerting to try to figure out the stock market. >> yeah. we might hear more today with the hearing. michael cohen trying to keep prosecutors from reviewing that evidence when we come back, more corporate news this time from starbucks dealing with the fall out of the arrest of two black men in one of the philadelphia stores. what kevin johnson had to say.

trying to avoid the first back to back losses of the month about we're about half way through. there's the premarket. more "squawk on the street." you know, i used to be good at this. then you turn 40 and everything goes. tell me about it. you know, it's made me think, i'm closer to my retirement days than i am my college days. hm. i'm thinking... will i have enough? should i change something? well, you're asking the right questions. i just want to know, am i gonna be okay? i know people who specialize in "am i going to be okay." i like that. you may need glasses though. yeah. schedule a complimentary goal planning session today with td ameritrade.

you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party.

starbucks ceo kevin johnson issued an apology following a weekend incident which saw two men arrested at a philadelphia starbucks location they asked to use the restroom but were denied because they had not made any purchases johnson said it was rehenceble and would meet with the two men to apologize here is what else he said about the situation on "good morning america. >> starbuck was built as a company that creates a warm, welcoming environment for all customers. that didn't happen in this case. that i know. and so it's my responsibility to ensure that we review everything we review the actions the store manager, we review the guidelines that were provided, and we review and invest in the training necessary to ensure that doesn't happen again. >> anybody who been knows managers have to make a call on, you know, whether you're allowed to stay. they sort of condone their

stores as a place to hang out. >> not to be too granular, but the bathroom issue has been -- >> yep. >> is it a bathroom? is it a place to buy and get to use the bathroom i think that the video was damning because it seemed like, wow, did someone just call in what looked like, i mean, if you had a robbery, would you have that many police coming? >> anybody who has been a tourist to new york city or resident knows public bathrooms are scarce if you need one, you go to starbucks first, right >> well, look i'm a big customer of a drugstore down the block, and at one point i was having -- and i said not to mind not to get too personal and they said absolutely not. you must not then i started talking about the amount of business i did and i didn't say who i was

you know, my wife said you're nobody so what the hell it was like are you kidding me i think there is a natural tension. but you also, i think, know the rules, most people if you go -- you kind of expect they want you to do that one of my friends who was a barista said we have an open door policy and it doesn't really work. >> is there any real risk? the stock is down a bit. longer term as a result of the incident >> is there a united airlines situation where quickly maybe it's better. quickly kevin johnson said it's terrible i would like to know whether they're going to fire the crew there. but it is tough. i'm saying the policy is tough it's tough because you're my friend is a barista. it was shocking how bad it was but they continue the policy because they want to be friendly and they want to open doors.

i think maybe they change the policy. >> that would be a big change. >> wouldn't it be. >> yeah. >> it would. by the way, in that space today, mcdonalds gets cut price target 170 they think some of these 4% same-store sales estimates are aggressive they think more optimistic is more like two. >> that would be if they had that story from someone high in the company, that would be compelling i'm not getting that my read is it's business as usual. it certainly is note worthy. but i'm not -- my sources don't indicate that. >> we'll find out. mcdonalds has been a star the last couple of years. >> ever since they came in and a lot of what he's done, by the way, he got approval early he's done so much!

it really does kind of stagger me that people don't give him credit for a lot of the digitization but mostly what happens is that the franchisees love him they put more people on. they get more excited. the coffee, the inexpensive coffee i think he's done a lot. he's not getting credit for things he's done in the last six months. >> follow that and cramer's mad dash count down to the opening bell on this monday another look at the premarket it looks solid. dow expected up 188 at the moment back in a moment ♪ feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity,

technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow. hello. give me an hour in tanning room 3. cheers! that's confident. but it's not kayak confident. kayak searches hundreds of travel sites to help me plan the best trip. so i'm more than confident. forgot me goggles.

kayak. search one and done. when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today. okay there it is. time for a mad dash on this monday we'll talk a little ulta

one of your favorites. >> yes i think what happened let's call this a rerating bottom everyone kind of said wait a second the growth may be slowing down but, you know, the growth still much better than almost everyone else and one of the things i liked about it gugen heim did a survey today. it's the second survey we had one last week saying business is pretty good. 500 ulta ultimate ewards member this is a great growth retailer. why? because it's very much linked to selfies. very much linked to instagram. hey, whatever happened what was that russian thing i told you that would be cambridge cambridge facebook >> it's already fading quickly. >> it does seem to be you need another incident what i like is in the end you got to look different when you go out ulta has been the big winner

and sephora for jc penney that's how you get a bottom. it's a big retailer. i don't want people to think i'm focussed on some niche this is no niche. >> you've been focussed for a long time and generally speaking it's been a good place to focus. >> thank you. >> over the last few years you've been discussing it. >> people will pay up for premium make up. and for hair and for beauty and that's something that these guys have been really blessed with the change in the way we look at ourselves when we go out the door. >> all right we got an opening bell coming up we'll spend time on kraft heinz. going through a note this morning. it's interesting we'll share it with you. five minutes until we get started for the week stay wh itus

mom and dad got a new car... with the extra third row of seats. they think it's theirs. look at them, they have no idea! it's not theirs. it's mine. mine. mine. mine. the new lexus rx 350l with three rows for seven passengers. are you excited about your baby sister coming? experience space for the unexpected with the rx l, part of the rx family. experience amazing at your lexus dealer. at fidelity, our online u.s. equity trades are just $4.95.

so no matter what you trade, or where you trade, you'll only pay $4.95. fidelity. open an account today. you'll only pay $4.95. anna and a little nervous. into retirement... but not so much about what market volatility may do to their retirement savings. that's because they have a shield annuity from brighthouse financial, which allows them to take advantage of growth opportunities in up markets, while maintaining a level of protection in down markets. so they can focus on new things like exotic snacks. talk with your advisor about shield annuities from brighthouse financial- established by metlife. you're watching "squawk on the street" live from the financial capital of the world

the opening bell in over two minutes on this busy monday. watching earnings kick into second gear. the news in syria over the weekend. an intriguing tweet by the president this morning russia and china are playing the currency devaluation game as the u.s. keeps raising interest rates. not acceptable you might know by now the treasury did not name either country a currency manipulator in the report last week. people trying to decide if this is a knock on that or a knock on the fed raising or both. >> this is one of the most quizzical. i think that we're all -- i just wrote a piece this morning saying, look, you know, you have to get used to the idea that we're going to have the forays that may not make that much sense to wall street it's hard. russia, obviously, not that big a player with us

and the banning of russian aluminium has brought that up. but if i can figure out how to make the determination for our market on that and i don't think he's attacking the fed. >> i do not know. >> you know a slime ball tweet is so much easier to interpret. >> the true meaning? >> yeah. i think the meaning there is kind of like what we used to say in the playground. david, you slime ball. >> what prompted the tweet typically it's something he saw on television. >> right. >> what happens to the "washington post." >> 9:00 after fox and friends. >> politico did ask this morning what tv segment set it off >> that's a good question. [ cheers and applause there are a lot of stories about

online companies and taxes needless to say amazon already pays taxes even though it doesn't have to. [ opening bell ] >> celebrating the recent ipo on the nasdaq bank of america we got this morning. and tonight we'll ganneet netfl >> we had a similar situation with netflix last quarter. we had multiple. and then what happened was all of those were too tiny versus what happened. that deutsche bank upgrade on friday made me feel, as well as other things this morning, is

okay, listen it's going to be such a blow out because of international and international is blowing like a weed. i guess what i'm saying it's a deserving one. >> only $1 billion separates netflix and disney. >> that was funny. we work at it long enough we think alike. i was looking at that, karl, only $15 billion of course, disney's focus and its strategy it is pursuant with the acquisition with the assets with the beginning of ott products for sports and entertainment is competing directly with netflix, as we know. >> right. >> bob has seen the future and it's that. >> this stock is a believer. 101, 99, 100, 101. while the market had a big run

i think a lot of people just say okay until they digest the fox deal, it doesn't matter what "black panther" did. by the way, amazing. some of the movies coming out in the spring are going to be so good. >> yeah. >> i don't know. there are still questions, jim, as to whether disney is going to potentially face competition from our parent company comcast for those fox assets, which gets you back to that report. washington, d.c., where many are paying close attention for the government's case against the at&t time warner deal tomorrow you'll get the final witness from the government because of a scheduling conflict the at&t will actually be presenting witnesses today and then the doj has one more witness before wrapping its case that witness will testify tuesday. but the key ones last we week shapiro listen here are some comments

from somebody in the courtroom for every single minute. shapiro got clobbered on cross looked foolish there's just no way that the government is seen winning by any people who have been watching this. that doesn't mean that judge leon isn't going to who know what the decision will be. we won't know. circling back to where it's important to the likes of disney well, because if, in fact, the government loses then comcast at least would have the opportunity to potentially move forward because if they don't lose, the government wins. comcast has no way they could get regulatory approval. whereas if the government loses, comcast could imagine it could make a case for why it would receive regulatory approval. then you get back to things like the president and how important he is in these potential issues. whether he had any influence at all on why the government is opposing this deal and whether the fact he called rupert murdoch to congratulate

him on the disney deal would play favorably for that. that court case is important for this deal, for aetna, cbs, express grips, and sigma it's important for a lot of things. >> this weekend i was going over nxp. once again, just trying to figure out the vast gap between what call c-- qualcomm is gettig and what you're getting. take overs beleaguer me. i'm sure we're going to talk about kraft heinz. >> they go on forever, jim nxp is in the 18th month they'll refile i don't need to restate the story we did we haven't heard yet, i don't believe, this morning from qualcomm about that plan and the extension with nxp but that stock is 113. it's a 127.50 deal >> i was going over how bad it was. it was bad there's been a take over premium

in the regional banks. we know that banks are done. no big bank can get away with scrutiny and buying pnc and the regionals. they lost their take over premiums so the things that are losing take over premium right in front are really extraordinary i would assume we don't have as much information why the stock is up. there was talk about that may not happen the take over will seem fraught to me. what kind of take over gets smooth sailing these days? that's a great question. and i -- something that is purely domestic largely domestic will have a easier chance. but, you know, vertical integration is a question of the at&t deal. horizontal is an issue think t-mobile and sprint. if they get to the finish line this time in their latest talks. we're going to be faced with a prospect of, really, is the

government going to allow it to go in the bill anybody pace each month? it's a tough thing to answer if they don't get to the finish line on qualcomm and nxp i would argue it seems unlikely they won't get to the finish line they won't eventually get the approval if they don't, it sends a chill throughout any deal. >> so many stocks had run up betting they would be next. >> yeah. >> it was one after another. so let's roll back the price >>well, let's before we get to it talking about mnh we need to go other the kraft heinz call this morning from credit squeeze a well-known analyst that has been around for a long time. we went through the report sara has been looking at it. you can see what the stock is doing. he takes it to an underperform $55 price target here is a few take aways from

mr. moscow quote, young executives take on a workload that exceeds that of any other company. he talks about the culture of kraft heinz. that said all the industry contacts we contacted expressed concerns around the sustainability of operating the kraft heinz business with the culture. particularly they said the turn over rate at kraft heinz has increased to an alarming level increased the execution risk of the company. it's hard to trust the path of the growth we share concerns with investors with looking at their peak sales growth stagnating and the company talking about reinvestment it becomes difficult to create value as a stand alone entity. and, finally, he goes on to say going forward we think the company's reputation for cost cutting will make it difficult to engage with management teams when it comes to an m&a situation that put a high priority on community welfare. it's a damning report. >> yeah. it's funny this stock, which is

trading at 159 on this that stock opened up at $96. the unilever deal was the apex of how far you can go. and now when i speak to i almost have everyone. i talk to almost every other company and they're saying the thing with kraft heinz is over it would be hostile. and no one is buying for that. >> unilever was a key moment we focussed on it very aggressively at the time i would point out in terms of how important for the future kraft heinz and their inability to get it done they said we can't be hostile ever and here we are well more than a year later and they have done nothing. >> and, you know, we get a chance to speak and very important, by the way. there was a report last week

about visor not wanting to buy bristol anymore. it could be big turn over. >> we'll get to mick hey, mick. >> lung cancer trial results coming up from bristol meyers now. you're seeing the stocks move. merck is a little bit higher and bristol lower. merck up about 3.3% on these data when combined with theme therapy in a clinical trial shown to reduce the risk by about 51% that's more than analysts were expecting. they were looking for about a 30% reduction there. so that's merck featured and you've seen their stock go up about 3.5% bristol-meyers had combination with the other amino therapy drug showed a reduction in the risk of progression or death of

cancer by 42%. versus chemotherapy. these are not directly comparable you can't compare the 42 and 51% there. that beats expectations. bristol-meyers are down more than 61% analysts probably interpret it it extends merck's deal it had huge news this morning we'll continue to follow the updates and bring you anymore. >> thank you very much for that. >> last few days have featured a sign that this would occur bristol study is not turning out. i think a lot of people are sighing why didn't i know this it was so well in the embargo. i'll tell you why, because mr. kent fraser who runs merck has consistently wanted to down play the hopes because he is uniquely focussed on not giving families

that they've got a silver bullet obviously 51% and 49% know but i think that his dramatic ability what merck can do which is up a quick 5 points didn't react. this is one of the most caring the ceos in terms of wondering the impact of families to say hey we've got it this is us he just doesn't do that. >> it's the key of merck. >> right. >> it's 9% of sales. 3.7 billion and trying to expand. >> this is the biggest market out there that is still to be had. remember the largest killer in our country is not heart attack. it's smoking and that has not been talked about much almost as if, hey, we put a big tax on smoking therefore, okay. the tax is on the system itself. and you want to pay a lot for

something that saves 51% if you're a family member of someone dying you didn't sit there and say, you know, i'm going to let that person die because they smoked a lot. that's not how it works. merck is deserving it's happening. >> yeah. getting one today. we didn't do wpp. >> yeah. >> of course gone effectively immediately and no real clarity on what the issues were whether they were misconduct issues. not well explained just that it was time. and the interest of the company. it was time for him to go. >> yeah. brian sullivan had an interesting interview on the 5:00 show about financial times reporter who said there may have been a mixture pure speculation he didn't want to speculation. some financial and some personal but said, look obviously because he got his benefits that it was not something where he was shown the door we've seen a lot of show the door

this was not a show the door because otherwise he wouldn't have gotten his package. >> right founded this company, of course, in 1986. and become by far the largest in the industry. >> a lot of challenges, though. >> right well known and i think a lot of his judgments are because he has these great consumer product companies and a lot of our job, my job should have been wait a second is business any good i regret that. i saw him in the super bowl. just pressed him about how proctor and how much money proctor is spending online i don't know anyone who predicted any of these. >> yeah. we'll get proctor numbers this week. >> yeah. >> sir martin is on the cover of "the ft. >> may i say he looks 50 my wife thought he was 50.

>> he's 73. >> you look 50, too. >> stop it. >> dow is up 140 let's get to bob on this monday. >> good morning. happy monday, everybody. i want to show the s&p future the. we started moving up over the weekend. most traders view the syrian operation as a bit of a success. i heard the phrase "one-and-done" a number of times. you see the futures over the weekend. and we moved up over saturday and sunday, actually, and increased as we went into the morning today. sectors and transport strong industrial strong. jp hunt had good earnings. that's helping a lot of transports ch robinson was strong the big industrials up on the upside health care is good. banks are going back to foreign here they had a pretty good going into earnings season i noted several times except for friday, the banks generally have held up very well. friday may have been the sell-off friday may have been a oneoff. bank of america was up at the open you can see it's flat here but the regionals all to the

upside retail is the only thing that is for the done side. it's early on the bank herbings front. we can make general observations already. credit costs are still low in some cases it's flat. fee income is higher everybody is complaining about charging more for withdrawing money from banks there's a bit of a pick up in equity trading we saw that. a lot of people are debating whether it's sustainable i think it's not based on the volume trends i've been seeing there's some negatives we haven't seen the pick in lending. bank of america is down 1% i was surprised to see that. but we're not seeing the big pick up in volumes there for loans we were expecting to see here again, question about whether we're going to continue to see high volume in helping out the trading accounts there's a lot of discussion speaking of what happened with the broker charles schwab had good numbers they were in line with expectations they made a big, big point about all the volatility in february

and march. helping them out take a look at the numbers that schwab reported from this morning. trading activity up 40%. call volume up 20% assets under management up 13% they keep gathering more and more assets. question whether the volume will continue i don't see it in the last month or so. i'm not sure we would get the same rebound in activity finally, a big debate about peak earnings it's simple, folks the argument we'll have a great year yep, second, third, fourth quarter they going to be fantastic. eventually 2018 will end with 19%. and 20120 will have 10%. we have to find a way to move on and figure out whether or not the market can sustain that. the good news, the revenues are high we'll get 5, 6, 7% revenue growth this year tax benefits may be stronger than we thought. buy backs may be bigger than we thought. and stocks are cheap the bulls are arguing there are

factors that can keep the market high we're at 16 times forward earnings it if we can find a reason to get rid of some of this extra volatility we've been seeing like global, the multiple may possibly expand. again, big debate on the street about that up 177 points now. karl, back tow you. >> thank you very much when we come back, new york fed president bill dudley in a cnbc exclusive as he gets ready to retire in two months. take a look at the movement in treasury this morning. near to 286 as retail sales come in above expectations. back in a minute we had long deployments in iraq. i'm really grateful that usaa

was able to take care of my family while i was overseas serving. it was my very first car accident. we were hit from behind. i called usaa and the first thing they asked was 'are you ok?' they always thank you for your service, which is nice because as a spouse you serve too. we're the hayles and we're usaa members for life. see how much you could save with usaa by bundling your auto and home insurance. get a quote today. at crowne plaza, we know business travel isn't just business. there's this. a bit of this. why not? your hotel should make it easy to do all the things you do. which is what we do. crowne plaza. we're all business, mostly.

watching oil prices down almost a full buck jackie >> good morning. crude prices are down this morning after the air strikes in syria over the weekend oil traders calling this a buy

the rheum osell the fact the rumor last week, markets didn't know what to expect the fact these air strikes appear to be a one-time action. so there's nor -- no more anticipated strife and things seem to be calming down. that could change if russia gets more aggressive here syria isn't a major oil producer but strife in the region is always a concern because of the oil producers surrounding syria. russia is a big oil producer there's always the worry that supplies will be at risk carl >> jackie, thank you very much jackie deangelis the dow continues to hold onto gains up about 158. you worry about -- we're going to talk more about syria in the next hour. sanctions that are sector specific affecting aerospace or oil or aluminum in this case >> yes, i am i just think that we have to be very careful the weakness that we saw in nordstrom on friday.

we saw in kohl's this was directly related to sanctions, perhaps that are going to hurt private label because so much apparel is made in china the sanctions against russia the giant aluminum producer, alcoa. we have to stay on this because every day you'll have to read the fine print of what is -- what's at stake and then larry kudlow is going to play an incredibly important role in terms of telling us what we should walk back and what we shouldn't worry about. he knows our business. that's really helpful. >> not easy to do. ist easy to keep track of all th we'll get stop trading with jim in a minute. dow is up 150. don't go anywhere. you know what's awesome? gig-speed internet.

you know what's not awesome?

when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. live shot of joint base andrews near washington, d.c., as the president is leading marine one to board air force one on his way to miami today for a tax event. any headlines out of that, we'll bring them to you. he's been active on twitter as the war of words regarding james comey continues. and then today, venturing into the universe of currency devaluation and rising rates so you really can't turn your

head for a minute. >> not at all. we're following everything he's changing the dynamic of how to own stocks. what you have to do. think longer term. >> let's get to jim and stop trading. >> i have fabulous news for parents and for, of course, people who suffer from major depression a very good drug alkermes. the fda decided to let them go forward to look at it. major depression and then i don't know whether people understand the importance of -- they had fabulous reports on a nasal spray chetamene. the lgd cause of death among youth is suicide so this is great news for sufferers of major depression and i'm just so thrilled j&j test was really a lot of -- my daughter is in this field and it is good news. >> j&j earnings tomorrow >> yes, stay close to that >> what's on "mad" tonight >> i have dynegy which is

vistra texas utilities. david, you've covered that a lot. it's the largest power merchant now. they announced this acquisition and changed the name no one gave it any import. i love following the utilities if only to get a real read on the economy. they know more than anybody. >> jim, we'll see you tonight. >> we've covered a lot "mad money" tonight 579:00 p.m when we come back, an exclusive with will dudley how do you gauge the greatness of an suv? is it to carry cargo... or to carry on a legacy? its show of strength... or its sign of intelligence? in crossing harsh terrain... or breaking new ground? this is the mercedes-benz suv family. greatness comes in many forms. lease the gla250 for $349 a month

at your local mercedes-benz dealer. mercedes-benz. the best or nothing. attention homeowners age sixty-two and older. one reverse mortgage has a great way for you to live a better retirement... it's called a reverse mortgage. call rfree information kityour with no obligation. it answers questions like... how a reverse mortgage works, how much you qualify for, the ways to receive your money and more. plus, when you call now, you'll get this magnifier with led light absolutely free! when you call the experts at one reverse mortgage today you'll learn the benefits of a government-insured reverse mortgage. it will eliminate your monthly mortgage payments and give you tax-free money from the equity in your home... and here's the best part... you still own yohome. call now! take control of your retirement today!

♪ good monday morning. welcome back to "squawk on the street." markets starting out the week with a gain. trying to avoid the first back-to-back losses of the month as we're about halfway through april and earnings season kicks off again. our road map begins with the president's foreign policy why stocks are shrugging off the syrian air strikes this morning. the former ambassador to syria will join us next.

>> cnbc exclusive. new york fed president bill dudley live with us in just a few minutes. and finally, well, wpp under pressure this morning after its founder mark sorrel resigns unexpectedly first up, more economic data diane olick has that on housing out of d.c >> good morning. home builders sentiment dropped one point to 69 on the national association of home builders index. that's the lowest reading since last november and below expectations, although anything above 50 is considered positive. the index stood at 68 a year ago but hit a high of 74 as the tax relief bill was being passed through congress builders are citing rising costs of land, labor and especially materials for the drop nahb chairman said tariffs placed on canadian lumber and other imported products are pushing up prices and hurting housing affordability. of the three components, buyer frsk was unchanged, sales

expectations over the next six months fell 1 point and current sales conditions fell 2 points to 75. on a three-month running average, builder sentiment in the south was unchanged. fell two points to 66 in the midwest and in the west, it dropped 3 points to 76 lots more of this on cnbc.com. back to you guys >> diana thank you very much the united states as you know executing those air strikes against syria on friday in response to a suspected chemical weapons attack our kayla tausche is in d.c. and joins us with all the latest >> good morning. the white house is saying despite those air strikes over the weekend, there is no change to its policy in syria the press secretary telling cnbc that the president is clear he still wants u.s. forces to come home as quickly as possible saying we are determined to completely crush isis and create the conditions that will prevent its return we expect our regional allies and partners to take greater responsibility both militarily and financially for securing the

region the president of france which participated in those u.s.-led air strikes made comments last night he had convinced president trump to stay in syria long term so this is certainly an interesting development from the white house's side just a few moments ago, the president was departing for florida where he'll spend the majority of the week and did not take questions from reports or the south lawn on any topic on syria or on his various frustrations here at home. his personal attorney michael cohen after an fbi raid of his offices and apartments a week ago will appear in a manhattan court today. and the former fbi director james comey beginning a weeks-long media blitz in which he began with an interview saying the president could possibly be compromised by the russians he may have obstructed justice and he is morally unfit to be president. listen >> our president must embody respect and adhere to the values that are the core of this

country. the most important being truth this president is not able to do that he's morally unfit to be president. >> the president striking back on twitter this morning saying that comey drafted the crooked hillary exoneration long before he talked to her then based his decisions on her poll numbers disgruntled, he, mccabe and others committed many crimes beyond that tweet, the president said nothing when asked repeatedly about comey today carl, back to you. >> kayla, we'll watch for his arrival in miami soon. for more on the u.s. foreign policy in the middle east, we're joined by ambassador nicholas burns and former ambassador to nato and greece and ambassador richard murphy, former ambassador to syria and saudi arabia great to have you both wis th u. thanks for your time this headline out of macron today that they've convinced the white house to stay in syria for the long term. what do you think that means >> the long term depends on what

president trump says is the long term he's gone as far as six months i don't know if he's ready to go any further. i hope so. >> ambassador burns? >> i think the united states is going to have to retain forces in the northern part of the country, east of the euphrates river because we have to defeat isis isis is not yet defeated in syria and iraq so it stands to reason you'd keep your troops there we also need a long-termer term diplomat strategy to get back in the game to counters the russians and iranians and syrian government diplomatically in the future >> ambassador murphy, we've been trying to monitor the market reaction to all of this. doesn't seem like investors are spooked by it. did get volatility last week leading up to the weekend. as it relates to a bigger confrontation between the u.s. and russia because we're talking about the number one and number 11th biggest economies in the world, what's the likelihood of that right now >> there's going to be further sanctions put on russia and its

dealings with the assad regime thanks to the precision of the military operation last week, more open confrontation, anything military in nature is off the deck so i think the market should settle down. >> so you don't see more strikes in the near term >> in the near term, no. but what this operation that the syrian regime has carried out accomplished was ruling out the last significant rebel opposition they left a day later and that had to be negotiated before between the rebels, the russians and the regime i don't think our attack played a direct part in that. but that's closed down now >> ambassador burns, was this enough to make some sort of a positive statement here, or change the behavior of the syrians in any way >> well, we'll have to see how

president assad acquits himself in the future. i do think president trump was right to order this set of cruise missile attacks and right to do it with the british and french we have to stand up to the chemical weapons convention. the ban on chemical weapons. we have to defend innocent civilians. whether assad believes that we would strike again, i guess only he would know and so the true test will come if there's a further use of chemical weapons by the syrians will the u.s., uk and france take a similar effort? i hope they would because we cannot allow or normalize the use of chemical weapons in the world today. >> some analysis this morning in the papers about the debate within the white house between the security counsel, the pentagon, a test of sorts for bolton how do you think this characterizes the white house's willingness to use force in the future >> well, mr. bolton is known for his support for military

operations, hard line, but he has other advisers around who will say, look, as nick was saying, there's a need here for a broader strategy to bring stability to that extremely troubled and fragmented part of the world. >> the president tweeted this morning about currency devaluation actually he said that russia and china are playing the currency devaluation game as the u.s. keeps raise interesting rates. not acceptable ambassador burns, you know, we cover currencies here. the u.s. currency has actually been devalued since the fed started raising interest rates in december 2015 so this is blatantly false the chinese currency is stronger for the year russia's currency barely moved until we put on sanctions. so none of this is true, but it does raise an issue which is the president is very focused on trade and currency manipulation. neither of them were called out in last week's treasury report

on currency manipulators but what is the potential danger or impact of mixing this trade and economic policy with diplomatic relations and foreign policy >> i think you're seeing the real danger and risk of twitter diplomacy by the president when he fires off a tweet without having talked to his advisers, without having confirmed the facts. you're right treasuries report last week did not brand china a currency manipulator. but now the president does so it makes us look a little bit unstable and unsteady. pardon >> because the chinese currency is stronger. so the treasury couldn't do that >> you know, as ambassador murphy knows very well, i think he and i would agree that the president's word -- any president's word is sacrisanct we have to have credibility. this reduces our president and country's crediblity when he says things that are not accurate >> to the larger issue of the mideast. syria, obviously, is at the

center of that but iran, hezbollah, the israelis, the saudis versus iran so many different competing factions and the russians and the u.s. any sense as to where this will go or the president's instincts to withdraw, what the outcome will be? >> in the short run what you can already see is a drawing closer of iran and russia up against the u.s., uk, france they feel they need that support and that protection, that is the iranians from russia it's a kaleidoscope. it's going to keep shifting. israel stood aside, but its concerns have been made clear to washington about the situation in syria >> gentlemen, appreciate the guidance it's one investors need to at least try to understand. richard murphy and nicholas burns, we'll see you next time speaking of the fed raising interest rates, let's get to

steve liesman who is sitting down with new york fed president bill dudley. over to you, steve >> sara, thanks very much. i'm here with new york fed president bill dudley. president dudley, thanks for joining us. >> great to be here. >> i really want to pick up right where they left off, the nick burns conversation there talking about china. they don't seem to be devaluing their currency it seems like the chinese you an is appreciating versus the dollar >> it's been moving in line with what the dollar has been doing the dollar has been weaker so as a consequence of that, china's basically managing their currency relative to a basket that includes other currencies so the chinese currency has preerk appreciated over the last year the issue for the u.s. is really intellectual property rights and access to chinese markets. those are legitimate issues the u.s. has with china and those are the issues we should be pressing them on

>> is the currency a way we can solve that trade balance problem? >> the currency would have to move a lot to really solve the trade balance problem. i don't see that in the cards. if the chinese currency appreciated, a lot of that activity would move to other lower cost countries >> and they become less competitive so that would help our trade balance or help the u.s. side. >> at the margin but chinese economy is more complementary to us than competing directly with us if china became more expensive to do business in china, things would move to vietnam, malaysia, the philippines, bangladesh. other countries. >> in a recent speech you gave a full-tloe full-throated defense of free trade. is that a concern to you what seems to be coming out of this administration, the threat of tariffs, even large-scale tariffs when it comes to china >> there is a risk here. we push very hard to trade and that leads to lower trade barriers, better access to their markets, better protection of

our intellectual property rights or we push very hard on trade. we raise tariff barriers they retaliate trade becomes less open. that's very bad for us i don't think we know which course we're going down. >> when you gain this out, i can see an inflationary outcome from higher tariffs but also a lower growth outcome where do you put the risk? >> if trade barriers go up, it's just bad for the u.s. economy. more inflation, less growth, lower productivity a bad, bad outcome >> i'm going to now start the conversation where i originally wanted to start it which is on market valuations. another day we have these triple-digit gains and we've had 500. the first is market valuation. they are excessive at this point. do you think they are so and what about the issue of volat e volatili volatility >> it seems if you look at the stock market in the context of an economy that's growing and expected to continue to grow

over the next few years, the stock market valuations don't look unreasonable. the volatility is sort of back to a more normal regime. what was unusual was a low volatility that we saw in 2015, '16 and '17. we're back to a more reasonable level of volatility in the stock market >> so you don't get worried when you see things like 500-point swings in the last hour of the trading day? >> as long as market function is good people can execute at prices close to the last price, it's not a problem. >> what about concern about systemic risk which is the thing that animates the federal reserve and especially yourself regulating these money center banks here do you have concern these market valuations, when it comes to stocks and corporate bonds and other fixed income instruments create risk for these big banks? >> we stress test the banks every year through the ccar process. and the stress test is severe. we've also raised the capital requirements for the big banks significantly and increased

liquidity requirements we think the banks are well positioned to handle stress. >> a conversation that's come up around the table at cnbc quite a bit is this question about, is there a power put and is it different from the yellin put. is -- does the federal reserve and especially specifically chairman powell have a level where they would come in with concern about a drop in the stock market >> the fed's mandate is maximum sustainable employment nothing about the level of the stock market if the stock market went down dramatically and stayed down for a long period of time, that would tighten the financial conditions the financial conditions were much tighter and would have implications for the economic outlook and we'd have to take that into consideration in terms of how we set monetary policy. a large decline that persisted for a long period of time, that would be part of the environment that the fed would have to take on board in terms of thinking about the appropriate policy

the stock market level per se, that's not our concern >> has that level changed, though, between -- as we've changed chairman at the federal reserve. chairman powell, is he going to be less sensitive to a decline in the stock market? >> i can't speak for chairman powell versus chair yellen the stock market is still at a high level of valuation. financial conditions are still very accommodative so when i look at what's happened over the last few months, has it really changed the outs look in a meaningful way? no, because financial conditions are -- >> there's talk in the last minutes about moving to a mutual language are you closer to neutral now? do you need to signal the federal reserve is going to a neutral policy >> i think we've signaled that's what we're planning to do over the next year or two gratdually remove monetary policy accommodation if you look at the summary of economic projections we published at the most recent meeting, they basically show a very gradual pattern of further interest rate hikes that take the federal funds rate up to 3%

or just north of 3%. >> is that nuch 3% >> different people have difference views >> what is yours >> i don't know what neutral is but it's a reasonable starting point in terms of lookingat what neutral may be over the long run it depends on other factors. what's happened to the stock market, the bond market, the dollar this idea there's this magic neutral rate that's sort of constant for all time is not a good way of looking at it. >> let's talk about what's more in front of us which is the rate hikes this year. one is done already. it looks like two more on the table but you've talked about three or four still being -- backing this idea it's gradual if you did four this year for an additional three >> look, i don't think we know how many more rate hikes we'll do if you look at the summary of economic projections which represent the participants, expectations at the last meeting. the meeting was three hikes this year but there were a number of people expecting four.

so three or four seemed like a reasonable expectation this year as long as inflation is relatively low, the fed is going to be gradual. if inflation goes above 2%, then i think the gradual path might be -- might have to be altered >> what's your best guest? three or four? and with the -- the market has not priced in four any extent at all? >> what's happened is the market understands more than four is quite unlikely, right? because that would no longer be a gradual path of monetary policy tightening. it would also imply the federal reserve was going to tighten by 50 basis points at a press conference meeting or go meeting to meeting so the market sees three is possible, four is possible, but five or six seems to be quite unlikely >> i have a bunch of areas and only three minutes left. let's see if we can do these quickly. john williams, your successor, was named recently ahead of that appointment, a lot of discussion about diversity and the search for diverse

candidates was this a disappointment to you that it was john williams or how do you square that with the effort to find a diverse candidate? >> i think the search committee made a tremendous effort to make sure they had a tremendous slate of candidates. so they did their job in that respect. and then they picked what they thought was the best candidate i think john is extremely well qualified to be the next president of the new york fed. i have a lot of respect for him. >> what about puerto rico. they are in the new york fed's territory for some strange reason that area was really devastated. is there more that you should be doing, more the federal government should be doing right now to bring back puerto rico and the economy there? >> well, there's a lot that needs to be done in puerto rico. some of it government aid but also some of it on the ground in puerto rico coming together and coming forward with a fiscal program that's credible and that extends for many years forward what we can do at the new york fed is offer information we can convene parties

we've had some workshops with small business and others to help them navigate the different places where they can turn for aid to help in the rebuilding effort we're definitely going to be involved there but unfortunately, the federal reserve's powers with respect to fiscal policy are extremely limited. >> and just the last thing, you had a specific job the lehman weekend you were planning for lehman not to be saved that weekend that's what you were doing looking back now, there's a new book out that says it should have and could have been saved i know we're sort november the lightning round, a very difficult topic here do you regret that lehman was not saved that weekend >> hindsight is 20/20. people are going to be arguing about whether lehman should have been saved or not. the problem was, if the federal reserve had lent to lehman brothers, then what happens? we would be lending into a run the clients would still be leaving lehman because they wouldn't view lehman as viable

i'm not sure that there was a better course. >> bill dudley, new york fed president. maybe the last interview but i'm sure we'll see you again back to you guys at the nyse >> and the beautiful halls of the new york fed steve liesman chatting with outcoming new york fed president bill dudley. has about two more meetings left as new york fed president. he always gets a vote at the table. what stood out to me is dudley on the markets doesn't think these crazy swings and the wild volatility is anything really out of the ordinary. some of the headlines dudley says rise in market volatility, a return to normal world stock market values do not look unreasonable so for those visitors looking toward the fed and that previous yellen put, whether there's a powell put or not, it doesn't seem like these conditions are warranting that. they seem to be okay with what's happening in the markets >> indeed.

watching yields closely. volatility trade barriers bad for the u.s. economy in his view. >> he did back up the view that the chinese currency has appreciated, as i said earlier as the president tweeted wrongly. >> yes >> as we head to break, look at shares of bank of america here we're still in bank earnings season bank of america beating estimates while citing improved growth in loans and deposits nothing like what we saw from the bank stocks on friday. icis bwhh aig sell-off. more "squawk on the street" right after this you know what they say about the early bird...

he gets the best deal on the perfect hotel by using tripadvisor! that's because tripadvisor lets you start your trip on the right foot... by comparing prices from over 200 booking sites to find the right hotel for you at the lowest price. saving you up to 30%! you'll be bathing in savings! tripadvisor. check the latest reviews and lowest prices.

you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party.

sir marten serrell out julia boorstin joins us with more on that story >> good morning. sorrel has resigned from wpp following the conclusion of an investigation started earlier this month into alleged personal misconduct no details released about what happened but sorrell rejected the allegations. this brings to an end his 33-year history building a global ad giant. overseeing the listing of the company on the nasdaq and acquiring a range of advertising and marketing companies including j. walter thompson sorrell was known for his massive pay packages more than 70 million sterling. that was one of the biggest pay packages in uk history for a founder, he had a relatively low percentage ownership.

only about 1.5% of wpp sorrell will continue to get paid the 73-year-old's resignation is being treated as a retirement which qualifies him for as much as 19 million in pounds over the next five years. as the board conducts a ceo search it did promote its chairman and named two new co-coos. the company's stock has lost about 35% on disappointing quarterly results over the past 12 months and forecasts zero revenue growth for 2018. this all, of course, raises questions about whether the conglomerate needs to be run differently or split up as cost pressures rise and both google and facebook rise in their dominance of the ad industry a source tells us he does not have a noncompete, and he's not ready to retire. back to you. >> thanks, julia boorstin. a check on the markets dow hanging into a tight range

gain of about 175 points earnings on deck lotolix tonight. a t talk about. we're back in a minute play "do it like this".

[music plays] when everything's connected, it's simple. easy. awesome.

time for the etf spotlight taking a look at the defense sector following the u.s. strikes in syria 76 missiles, i think >> obviously, just a reminder. a lot of conflict zones. things are bullish for this industry ae aerospace and defense outperforming for most of the last year and a half three etfs that track this group. the ita is the biggest of them they are really all moved together as you can see. the three lines on the top are different constructions of aerospace and defense etfs boeing, we've talked about being a tremendous outperformer. the more pure play defense sector plays have also been strong raytheon hitting an all-time high overall group up 1%. just the conflicts out there and obviously use of the products these companies make, you have a

big bump in the defense budget that obviously was passed. that's been bullish for sentiment and in general, there's a global industrial play that feeds into this story but they have much more secure order books. obviously, it's more protected despite the fact boeing is traded a lot on the tariff news. in general, the sale of these products there was a move in russia kind of a countermeasure to sanctions, perhaps restricting russian exports of titanium and maybe restricting some cooperation with western aerospace companies. does not seem to be affecting the group but something to watch especially for perhaps it creates higher prices of some of the materials. >> can these stocks keep going higher >> they're up 7% year to date. way outperforming the other industrials. bup 35% on a one-year basis. >> double-digit returns. thank you. over to sue herera with a news update back at headquarters >> good morning, everyone. here's what's happening at this

hour we begin with hundreds of syrians gathserring in a landmark square in damascus in support of the government's armed forces who claim they've succeeded in confronting the joint air strikes by the u.s., france and britain this weekend. the rally was broadcast live on syrian state media british foreign secretary boris johnson says the action taken against bashar al assad's chemical weapons capabilities was justified. >> it was the world saying that we've had enough of the use of chemical weapons the erosion of that taboo that's been in place for 100 years has gone too far under bashar al assad and it was time we said no and i think it was totally, therefore, the right thing to do heavy snow falling in the sierra nevada mountains in northern california this morning. whiteout conditions making travel particularly dangerous. today's forecast calls for more snow and temperatures in the low 30s. and here on the east coast,

we're getting rain and high winds. so what are you going to do? that's the news update this hour back to you, sara. >> happy spring. >> exactly when we return -- more from our exclusive interview with margaret, europe's big cop

welcome back to "squawk on the street." i'm sara eisen live at post nine at the stock exchange as always. taking a look at this market a little over an hour into trade. a nice rally on our hands reversing the decline we saw friday last week was an up one. dow up 205 s&p 500 up almost 0.7% all the sectors in the s&p are higher led by telecom, industrials and health care. >> meantime, waiting for new

details on sanctions this morning after nikki haley, the u.s. ambassador to the u.n. said there would be new sanctions on russia for aiding syria in the chemical weapons attack. michelle caruso-cabrera is with us for the latest on what we know >> u.s. officials made very clear over the weekend that friday night's air strikes on suspected chemical weapons facilities in syria were conducted in a way to prevent russia from feeling forces to react. oil is lower because it doesn't appear the strikes will morph into a wider regional conflict however, according to the pentagon, russia did dramatically increase its cyber disinformation campaign on social media here's dana white during saturday's news conference >> the russian disinformation campaign has already begun there has been a 2,000% increase in russian trolls in the last 24 hours. >> she didn't provide more details. newspapers in the united kingdom

report uk officials have seen the same increased activity and as you say, carl, we wait to see what new sanctions the u.s. imposes on russia as nikki haley stated yesterday just ten days ago, the u.s. imposed the strongest sanctions yet on russian oligarchs banning them from doing transactions in u.s. dollars which drove some russian stocks lower by 50%. sara, back to you. >> big move. michelle, thank you. let's talk about the impact of this and many other factors on u.s. stocks bob pisani on how the markets are gauging the syrian strikes >> what's the risk premium the word precision air strikes kept coming up over the weekend. this was very, very targeted it wasn't going to escalate into a broader issue necessarily. and i think today the markets are reflecting that. you can see stocks responding to market things like earnings. some industrials had good numbers. and more importantly, banks have

rebounded. we had a debate about this peak earnings thing the peak earnings people were saying, okay, going up 20% for earnings in 2018 but this is it. in 2019 only up 10% and the market has to reflect that my attitude is, yes, that's going to happen but it's too early to have that debate. this is a debate we should be having in the third quarter. plenty of room for stocks to go up what happened to peak earnings then the stocks will start moving to the down side. we're a little early on the peak earnings debate. >> so you -- >> why are they going to be great? >> they're going to be great because global economy is still expanding. number two, buybacks are going to be expanding. three, the effect of the tax cuts i think are still not fully understood i think there is still much more to be revealed about what's happening with tax cuts from these companies. that's why simply saying the analysts have taken this up 7% for the year on tax cuts is a

nice idea but we could go up 9% very easily or 10% >> bank of america this morning reported a 9 percentage point decrease in its overall tax rate and we may get more clarity in terms of buybacks, higher dividends or what companies oar. >> that's my point analysts are using estimates now. and the numbers are good but they could be off by a couple percentage points. >> so just to be clear, you buy this idea that earnings season is going to save this bull market and put us back on track? >> i'm in the camp that says we've not fully factored in the effects of the tax cuts, the increase in the buybacks they'll be higher than people anticipate and it's still too early to come out and say, okay, in 2019, our earnings are not going to be as strong. therefore, we should start selling the market off right now. >> you think we could be looking at 20-plus percent earnings next year >> 20% this year is, as of now, every quarter we're up close to

20%. 2019 is a crap shoot but right now the early signs are about 10% increase that doesn't mean -- that's not earnings going down. that's the rate of change going down >> we're almost at july -- july 1st will be here in no time. everybody will be focused on the 19 numbers >> my attitude is this is a third quarter debate to have we can still have multiple expansion on the fact that the numbers get better and better. we can still have the market overall move up. banks are 12 times forward earnings right now that's cheap you can have a multiple expansion very easily with some small things -- >> to your point they've already reported earnings. granted it's only been a day or two for people to digest them. yes, they're up a little bit this morning generally, i would not exactly say that's been an enthusiastic reception. >> loan growth remains anemic. bank of america went down -- >> although it is up >> their loan growth went down

that was eye popping to me and when you get very small flattish yield curve, it's hard to have your net interest move to the up side that's kind of an, too >> dollar weakening. oil rising those two things bode well for earnings >> finally energy stocks are emerging as a leadership group they've gotten beaten up so badly. in the last two weeks, we've seen them outperform and we have half a dozen on the new high list every day >> how do young the market is handling the question of whether all this new cash flow will be offset by higher wages, higher shipping costs, inflation? >> here's the problem. we are one or two nasty inflation headlines away from it becoming another issue maybe not like that early february report that we saw on the jobs report where we dropped 50 points on that friday all of a sudden, wage growth put on everybody's radar but i do think you're right.

there's the market weakness. just a couple nasty inflation reports away from it being a major issue. what does the fed do i don't know if there's a fed put under the market but the fed -- if there is a problem, the fed will not raise rates as aggressively is that a fed put? i don't know but they'll keep raising if the market is okay. >> some aren't so sure powell has the yellen - >> i'm not arguing for a fed put. they'll keep raising if things are good there's a bit of a ceiling on the market and they'll slow the rate of increases if things go bad. there's a floor. but i think that's where we're at >> it's like a mini point. dudley answered liesman on this. it affects financial conditions and financial stability and the outlook, then it's something we're going to consider. and if it changes that, then we'll act. so far, it hasn't. >> there's your argument there's the argument for the people in the missal we're constrained here

the fed will put a limit on how much the market can go up because they'll keep raising rates but there's a floor there because if trade issues become less of an issue, syria becomes less of an issue, the market will hold up fine and earnings will be good there's the middle ground argument we're range bound. >> a lot to process this earnings season. just getting started >> i still want to hear more from the companies i think we'll get some positive surprises. >> bob pisani, thanks. why starbucks is in hot water. a lot more on the protests taking place in philadelphia and on social media. plus what kevin johnson, the ceo, is saying dow up 218 on pace for the highest levels of the month. back in a minute

as we continue to monitor the fallout from facebook's data scandal, europe's approach has continued to be a major focus for investors. it came up reportedly when mark

zuckerberg was testifying before congress on friday, i spoke to eu's commissioner for antitrust and competition, margrethe vestager who has levees fines on google and amazon here's what she said about facebook >> i think more investigations are coming my colleague is in close contact with facebook. but for us, a very important thing is facebook say the new consumer rights when it comes to privacy that they will use them as a global standard not only something that they will do for europeans but they will use that as a global standard that is important because as citizens, we need to be able to enforce rights when it comes to privacy. and these new rights, they are simpler than the one we had already. >> guys, what struck me was the difference in terms of how she spoke about privacy and consumer rights versus what we heard from senators and members of the house last week when they were questioning mark zuckerberg. she is all over this the eu has this general data

protection regulation, gdpr, which is going to come into play in may and affect companies like facebook she consideration this a global benchmark. it's not going to apply here in the united states, but her hope is that it will change the practices of companies like facebook so that they will have more respect for privacy, at least follow these rules in places like the u.s. she looks at herself like a trend-setter and a lot of investors agree. >> basically our congress who was schedule zuckerberg to help write this would-be policy in this country >> completely different. that's why she sends chills down the spines of executives in silicon valley she handles everything from back taxes to privacy legislation to monopolies and one question i kept asking her, is facebook a monopoly? is google a monopoly which she wouldn't say but those are the investigations and conversations that are already happening in europe that only really are scratching the surface. so for congress, the message is look to europe if you want to regulate this.

>> interesting when it comes to monopoly in particular or the idea of it that they'd be ahead of us. is there any precedent at all for them coming after a potential monopoly >> look at the anti-competitive practices. >> they have different rules they look at the competitive set than the effect on the end consumer certainly they did i can remember some time back when they rejected ge and honeywell but that wasn't a monopoly case. >> look what she did with google she took google shopping they dominate and prioritize their results. got them to change their practices. levies a big fine and they are certainly looking into this sort of thing. zuckerberg is ready to fight back on that one, though, from his notes in congress. >> we do but it's very important. thanks, sara let's get to allegient air a 60 minutes report called into question the airline's safety

practices. our phil lebeau has been following this story and has more for us. >> this investigation by 60 minutes was troubling. that's the reason why shares of allegiant down more than 3% today. they were down 8% orallegiant d anticipation of this report on friday essentially "60 minutes" reported over the course of 35 minutes. it highlighted a very troubling safety record for allegin nachl t airlines between early 2016 and late 2015. they also talked about pilots being pressured to downplay safety issues and highlighted the faa and what "60 minutes" says was the lack of enforcement. faa without with a statement saying it defends its record with allegiant and overall its safety with airlines allegiant says this outdated

story bears no reflection of allegiant today and faa compliance practice and history. that may be the company's statement. shareholders today, they definitely are concerned that's why the stock is down more than 3% today it was down 8 or 9% on friday. steeffle saying we expect allegiant hasno competition in 80% of its routes. if you're in these cities where allegiant has a route, a lot of people in these smaller markets that allegiant serves, that's their only way maybe to go to vegas, phoenix, or or lalando. that's been the business model for allegiant and that's why perhaps you might see a limited impact on this stock today. >> phil, thank you phil lebeau.

>> we'll get a look from jon fortt on what's coming up. >> joining us to talk about new threat detection technology that they've got that involves artificial intelligence. that's coming up on "squawk alley. nobody's putting their money into equities. they're not investing in commodities or fixed income. what people areally putting their money into is what they hope to get out of life. but helping them get there requires a real refusal to settle for average. because when you approach investing with a tireless desire to beat the status quo, something wonderful can happen. those people might just get what they wanted out of life. or maybe even more.

welcome to holiday inn! thank you! ♪ ♪ wait, i have something for you! every stay is a special stay at holiday inn. save up to 15% when you book early at hollidayinn.com save up to 15% when you book early we've been preparing for this day. over the years, paul and i have met regularly with our ameriprise advisor. we plan for everything from retirement to college savings. giving us the ability to add on for an important member of our family. welcome home mom. with the right financial advisor, life can be brilliant.

you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party.

welcome back to "squawk on the street." i'm dominic chu. industrials are among the leaders in this charge higher thanks, in part, to the transportation stocks. among the leaders today, ch robinson, delta airlines up 3.5% or more. jb hunt, the shares of the trucking company up 7% on pace for their best day since october

2011 on the heels of a strong earnings report before the opening bell today dow transports working on a three-day winning streak guys carl, back over to you. >> thanks for that. starbucks apologizing after a video surfaced of two black men being arrested at a philadelphia starbucks for no good reason. the arrests were called a reprehensible outcome and plans to meet with the two men take a listen. >> starbucks was built as a company that offers warm, welcoming environment for all customers. that didn't happen in this case. that, i know it's our responsibility to make sure we review the actions of the store manager, the guidelines that were provided and review and invest in the training necessary to ensure that doesn't happen again.

>> it doesn't seem to be that much of a stock market story but an interesting story overall. >> starbucks has faced scandal before in 2014 when ceo howard shul schultz and founder wanted to have a race conversation and put it on the cups, turned out that they didn't want to talk race and 2013 they didn't allow guns and sales have been climbing. >> we'll see if they put this issue to bed for now at least. highest levels for the month as the s&p is flirting once again for going positive for the year "squawk alley" starts in a couple of minutes. as a control enthusiast,

i'm all-business when i travel... even when i travel... for leisure. so i go national, where i can choose any available upgrade in the aisle - without starting any conversations- -or paying any upcharges. what can i say? control suits me. go national. go like a pro.

good morning, it's 8:00 a.m. at starbucks headquarters in seattle. it's 11:00 a.m. on wall street and "squawk alley" is live ♪ got to testify lookin