wasn't going to stay for another full term and be dishonest with everybody and hang it up after the election which is what the political people say you should do i'm a policy person. i didn't want to do that. >> all right are we done? >> we are. >> no bathroom breaks. >> he's got his bottle here. >> tmi join us tomorrow "squawk on the street" is next ♪ good tuesday morning faber is at 13 d we'll talk to jeff smith later on this morning. the dow looks to go positive for the year at the open for the first time since march 20th. a 200 plus-point gain. we have trade, earnings, and taxes in focus on this tax day

europe is pretty steady. ten year below 284 we begin with stock futures up sharply. netflix is higher. the best performing s&p stock this year up another 7%. premarket on earnings. on the tax day, the president said america is winning with higher paychecks and a roaring economy. stocks are on track for a triple digit open fuelled by better than expected earnings from the likes of goldman sachs, j & j we can start with any of them. best equity trading quarter for goldman in three years. >> i think when i look at the goldman quarter, i want to focus on equity. i wish david were here with us they did 15.4% that's kind of unheard of. in terms of this environment i never thought they would get back to that that's like the old days it's line by line that i really like i find that when i look at goldman, i hate to this, because

jpmorgan -- they've been the best they may have been the best because this is their environment. and if this wasn't as good a environment as we get. i say it's the best, i guess what i'm saying is they've disappointed we don't have the conference call yet, but they've not been on their game. this was the quarter they were on their game. the other guys j.j. is consistently on the game united health, extraordinary i met with the ceo not that long ago and i don't know how they do it that is just one heck of a company. so this is a day where you're getting creme de la creme. the netflix conference call which was -- i said, you know, this is kind of like -- this is a ball team that is really the underdog, and they just won. a lot of people, i think, want to say, you know, here is the problem. they knew this all along

i don't think they did. >> yeah. >> i think it's just a great quarter. >> let's bring david in on that point. i mean, you look at the street high for trading revenue out of goldman today, david unh, netflix last night. we know the earnings season is a long one, but we have some a-players today. >> yeah, we do it's funny, because bob was joining us yesterday in the 10:00 hour carl talking about his belief that earnings would be strong. so far so good, i guess. and the r.o.e. that jim was talking about that was a big number no doubt about it. as you know, revenue is up 23% equities up 38%. even investment banking revenue up as a result of underwriting a good quarter for goldman but, jim, we've seen some other group quarters from the banks, so to speak, and they have not responded in the equity market to any great extent. do you think today will be any

different? >> i'll go a step further. if they fade this one, if they take this stock down, then the group is finished for awhile because this is about as good as it gets. we've seen bank of america i like to call i went over it again last night. jpmorgan over the weekend. i tried so hard to try to figure out what was wrong and there were not that many flies on citi goldman sachs the return on that is really good if, during the conference call, this stock goes down, i don't know what to say i'm going to have to look at other stocks because that's it. morgan stanley won't be able to save it. this is what i wanted to see better than expected almost every line if they don't like this one, they don't like it. >> it's true that jp m and citi haven't been able to hold their gains. the last hour of trading for the past six days on the s&p has faded. >> yeah. we're seeing a lot of people, i think, just get that it's too

good there's almost another feeling, by the way, that everything is lurking at all time. pick up the paper. i mean, yesterday i'm not going to get political but this sean han hannity said wait a second doesn't mean it's the end? i'm trying to think the guy is -- how did that get to be bad? i work with the law firm that is periodically had to handle some hot people is that bad? but in other words the tension betwe between white house, washington, and us every night you want to go home a little less long hedge funds don't have a lot of stock. it's like, my god, how did that happen sean hannity sell jpmorgan. >> right the fact we have crossed some of the 50 days on the s&p, the dow, on the russell right. does that change that calculus, do you think >> i think it does

and when i -- netflix is the beginning of a rational market it went up 8, 12, 15, then came back to up 10, then up 17 and 12 today is the first day you see a number causing it to be higher than last night response maybe it changes the market has been up for a lot of days. i'm not saying that. things don't hold. the stock that held? jp hunt. jp hunt. i mean, and why was that because jp hunt the bulls said not as bad as i thought. that's propelled this. judy, whom i like at goldman sachs, she goes to sell. sell look out you're not going to do that well look at these calls. they're saying there's corporate america. it's doing so good come on. get with the darn program. >> we'll get into the calls today. the sell on pepsi out of

goldman. >> frito lay i don't like frito lay goldman sachs 12 times earnings. but, you know, maybe they don't know what they're doing. i don't know i struggle jpmorgan, which already i think is not going to happen with my comment. you never know jpmorgan was up. it was the best ever and the stock was 215 and went down to 210. best ever. what do they want? >> watch for the call today out of goldman netflix is the other big story, jim, as you said up nearly 70% for the year q1, sub growth up $7.1 million that's the biggest increase since the ipo in 2002. the company plans to spend $8 billion on content this year on the earnings call last night. >> we have big plans for content growth, and you should expect that to continue we're also, as david said, trying to learn, hey, if we put in more marketing versus less,

you know, different countries, what are the results and so that's part of what you're seeing is the realization of the new opening and how it increases the value and the views of our franchises. >> more price increases today than you can count >> right and price increases, oddly, encourage more people. it didn't matter it doesn't blink 17 countries there's a whole new generation that doesn't mind watching titles i thought it was the most significant. michael factor, who had an underperform on the stock forever goes from 110 to 125 okay maybe the stock is at 329. what he's saying and everyone is saying there's plenty of fortune. maybe we have to forget the fact they're overspending because it's working and i just felt when i listened to the netflix call they come up with content that we want worldwide. and they'll talk about some program in brazil and we love it

in the u.s and they'll talk about some program from the nordic countries, and it's just killing it in latin america. >> there's so much in media. there's the netflix quarter. you have pivotal upping disney today. you have roku adding espn plus yeah. >> there's a ton of news and there will continue to be. the quarter from netflix is notable. they took price, let's not forget they were increasing price they, obviously, increased their guidance they beat all the estimates that were out there operating leverage is going up even despite what you heard reed haasings talk about is increasing marketing they found that marketing is helpful. they're doing a lot of billboards for their programs in cities all over the world. the churn rate is coming down as a result of their inclusion with the distributors, such as comcast on the box

so you get a little cut if you're comcast, but it helps churn a lot from netflix everything moving in the right direction. except you can have an argument, guys, about evaluation looking out and you know what the earnings will be and discounting it back is it the appropriate price? we were talking about the gap between netflix and disney it's closing today as netflix will have close to $140 billion market cap at the open and the growth of netflix it's incredible dominance to a certain extent in the terms of video. how things changed dramatically over the last few years and why disney is changing its business model in such a substantial way at this point in terms of how it reaches the consumer. >> bernstein out they see 300 million subs. you said yesterday there's a

sense they could raise prices and people wouldn't feel it. >> this is one where i think, again, netflix, spotify. apple. these are companies -- closostc. amazon will pay for it there's an article today which says, you know, it's now fang. it credits me with fang. >> no. i like to think that one day what is amazing to me is there is a -- on this netflix call, i genuinely think, carl, it could double. >> you could think they could double the monthly or annual >> yeah. the sign ups hey, david, is david with us >> yes. >> david. [ talking over each other >> what? >> let me ask you.

>> down, david [ laughter ] >> how many subscriptions can a person have? to all the different services. can you do hulu and amazon in amazon is part of prime now. and do spotify and netflix and the new disney offering and the sports offering. can you do all of them will the consumer do all of it or will they have to start choosing >> i'm going to give you the sobering analysis on this, david. i went to my beach house this weekend. my daughters kind of hijacked it and i put it on and what is on roku everything you mentioned what is plugged in even though you pay for it cable. cable. now she's a court hater. i pay for the darn thing i'm saying it's a universe of people 300 million you know, i looked at that number and said, you know, facebook is 2 billion and they're selling, you know -- no

they're not selling your name anywhere but it got to cambridge analytica. 300 million. it's a fraction of facebook and i know you have to pay for it, but, david, it's a different generation maybe you're too old. >> maybe. >>well, if i am, you certainly are. my guess it's a possibility. >> david, i had to program my cable this weekend i was like i had to screw it in and i had to see it. and, you know, this is the new world! the 23-year-old says, "dad, why do we have to pay the cable bill?" that's why the circular reason. morgan stanley has earnings today. i'm dealing with the new world where the push back is i've got roku and the smart tv. it comes out as a smart tv this is a stupid tv to me because of the things i'm paying for. but, david, in the end it's a

revolution it's not an evolution. it's a revolution. it's happening faster than we think. >> to your point about facebook and hang reed hastings did address facebook last night. take a listen to that. >> i'm very glad that we built a business not to be ad supported but subscription we're very different from the ad-supported businesses and we've been very big on protecting all of our members' viewing and we don't sell advertising. so i think we're substantially inoculated from the other issues that are happening in the industry and that's great. >> and what i thought was a couple of things that were amazing about the call it's very rare but when you listen to it, it's kind of an advertisement for all the stuff that people are watching it's a very unusual call you have one analyst asking questions. their release is just to say basically, you know, there was a big -- what was the biggest dispute on the call?

they cans. >> yeah. that's a huge deal. >> yes. >> you know the canns is taking our stuff. it was out of body it was almost as if, listen, we have programming we're willing to lose. our cash flow will be negative $3 billion david, people listen and say thank heavens they're keeping that and they get a $3 billion free cash flow. >> that is true. they do say that. >> mr. negative. >> mr. negative. >> i'm not negative. >> i like the burn about your age. he was not going to take back. >> david doesn't get it. he doesn't get it because of the age! it's about being youthful, david. >> out of touch. [ laughter ] >> these darn kids when we come back, former microsoft ceo steve ballmer will

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on this tax day in the united states, the white house and the gop making the case for the new tax law. this morning the president tweeted "so many people are seeing the benefits of the tax cut bill everyone is talking. nice to see. employment is up taxes are down enjoy! and then earlier on ""squawk box"" secretary men knew shen addressed the president's tweet. >> the warning shot at china and russia about devaluation china has devalued their currency in the past they devalued it significantly in 2016 after the president was elected. they used a lot of their reserves to support the currency so, you know, the president wants to make sure sure they don't change the plans

>> calls it a warning shot and said tpp depends on better terms. rejoining tpp. said they're confident in sustained 3% growth post tax cuts. >> that's the number you keep hearing about. that's the holy grail. we had an amazing thing happen yesterday with a zte shut down a big chinese company. we are fighting hard and i think people better start realizing we keep saying you guys aren't playing fair and i felt that the chinese number the trade surplus that came out i said trump is going to hit hard. >> yeah. retail sales up 10 we don't do numbers like that. >> no. >> regardless of whether you, i

believe, the exact number. now there's talk about them removing ownership caps on car companies. german carmakers doing well in the wake of that there's sorgum in the mix. will it lead to more soybeans tariffs? i have matthew boss on tonight i have to ask him tariffs on clothes. i mean, the chinese if they want to hurt in some places, we can make clothes elsewhere but not fast enough. i keep hearing from the people in the administration is don't ignore their 2025 plan their 2025 plan is basically to take what we have appropriated and make it theirs and i have to say, and, again, not political. true. >> i don't think people meaargu with that. cramer's mad dash and count down to the opening bell in a moment. a look at the premarket. solid futures at the moment.

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everywhere i felt that the technology is better they're saying they're taking share. and i think one of the things that people have to realize is it's not just against mom and pops anymore my thinking is they're taking share from pizza hut this has been -- and papa johns. both of their competitors -- papa johns in disarray pizza hut not coming together. i was all prepared to say, you know, thank you, patty doyle, it was a great run. started at 10. gave us special dividends. good luck to you i'm done dominos no i think there's a lot of foot here and i just wish they split the stock. i want more retail investors i could have talked about drop box. a lot of people liked it j & j but i think in terms of stocks that are so ahead in their industry, dominos is a dominant player. >> now the new plan to let you use your geolocation to order a

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talk with your advisor about shield annuities from brighthouse financial- established by metlife. you're watching cnbc "squawk on the street. the opening bell in about 60 seconds. busy morning it's tax day earnings parade continues out of goldman, netflix tonight csx, united continental. we know what happened with the airlines lately. and then the eurozone. germans expectations disappoint badly, jim. >> i vote for global synchronized we're getting global china we're not getting what we want i mean, the pool i have is argentina is better.

i mean, we're not getting what people think that has to happen if we're going to be able to see these big international companies do better we lose -- [ opening bell ] >> it's disrupting what is a placid environment that's because president trump in year 2018 had enough. >> yeah. there's the opening bell s&p at the bottom of your screen obviously pretty good at the open and the big board it's global payments celebrating the 17th listing anniversary. at the nasdaq revance. jim, your focus will be on gs and whether it can hold the premarket bounce. >> yeah. in the conference call, i said, the last few calls and the conference call there's been

what i call a tepid view i think the ceo, david, i think i have to get you in on this i think the ceo is just saying, listen, the environment is good. we do the r.o.e. at 15.4 wait until you see when it gets better i don't think he's going to declare victory, but, david, i have to tell you the stock is only up 2 now. >> yeah. yeah well, jim, i mean it was a more volatile quarter we know that goldman benefits from that there's a change going on in the way that the company has constructed its business to a certain extent we talked about it a number of times. relying on the hedge funds structured products that had high margins that changed, to a certain extent they're more reliant on the general flows. they may not have been as positioned as other banks. this quarter was a very, very strong quarter, jim. we'll see what the commentary is like on the call

let's not forget, you have a leadership change, at least in the offing at some point coming from this company. not that it necessarily will impact the stock it didn't when it got announced that david solomon was the sole president and coo. but it is still something for investors to keep in mind. >> david, you know what happened this quarter we were told that the thing to watch for the big banks for jpmorgan and citi. net interest was good. bank of america was controversial. they got hammered for not making enough for goldman we wanted to see fixed income trading commodities better we got it. suddenly we're worried maybe a lot of money was made with hedge funds and private equity why are people so upset with the thing we thought they wanted even three months ago, david >> i don't know. i don't know, jim. you're right fixed income currency,

commodities up 23% reversing what had not been particularly good performance previously i don't know what investors are looking for here that will necessarily change their approach of course, the stock is -- by the way, we'll see if morgan stanley reports a different model to be sure if anybody can beat the 15% that's the high on the street now, jim you would expect that investors would respect that number. but, you know, goldman hasn't been as consistent as that in the past perhaps they're waiting for more consistency. >> okay. let me give you a little kind of a spin on this united health. everyone expected a great number they gave you a great number plus a little. the stock is up nine that's at 4% the love for some sectors that we're seeing is rather extraordinary. i don't think united health on a delta basis was any better than the banks. but the love for it is extraordinary. look netflix everyone thought it would be a

big number it's a big number. people love it i'm confused a little bit about what they, so to speak, love and what they don't. one thing is certain, they're not crazy about the financials and i would have thought otherwise. the pe on the vix is very well it just is, i think, confusing to a lot of people what is going on j & j had a quarter that was good not perfectly clean it looked like it was helped a little more by currency. i'm going to put it in the baffling the baffling camp, david i'm not getting the clarity i would have expected at this time for what people like. >> the only two components that are in the red we should mention starbucks and abc news out with an alert for now. kevin johnson met with the two black men who were arrested at the philadelphia store

a company spokesperson confirming that as they try to keep a lid on any further public relations fallout. >> i think they're going full court. this is something i've been impressed with kevin johnson doing. not impressed with what happened i understand starbucks look what you want a ceo to do in something terrible like this is what he's doing. >> it doesn't seem to have the traction and the stocks have changed. compare it to united airlines when you drag a passenger through and the stock gets hit and comes back later, admittedly i think kevin johnson is handling it well he's going to report it next week and this stock, despite the fact some people are worried about china and whether people are worried. >> maybe the proactive nature

which kevin ishandling my father loved that they're tough. then again, their response was pretty as aggressive in the person who called. again, that's something tough. >> david, you want to raise the curtain on what is coming up out of the active passive today? >> yeah, sure. it plays into some of the news and things our colleague covered on his nighttime show. you know, his secondary show

jeff smith is going to be joining me going to hear some analysis. he's involved in the newel situation. by the way we haven't talked about that recently. we had martin franklin involved. he created this and walked away from the chaos he created. icon got five board seats and now jeff smith wants four. icon and jeff smith are at each other. and newel gets an upgrade from wells fargo which suggests upside and you crushed mike last night on "mad money. people are upset and sad on that side of things with what you did to poor mike last night >>well, i had mike on "mad money. and if you speak positive about what is happening on "mad money" i protect my franchise my franchise i believed for awhile they missed three times

i am concerned this quarter about toys "r" us. david, i don't think that it was such a great idea to just give the 6% stake icon all these seats. i happen to think that the man you're interviewing, jeff smith, is going to win. i didn't crush mike as much as he crushed the shareholders. >> understood. and, of course, i was sort of teasing a bit there, jim but jeff smith is in a serious issue, as you say. and he wants four seats. he's going up against icon we'll talk to him about that and a couple of other situations he's one of the most, if not the most active activist out there, guys i want to note another front this morning i don't know if you are watching but merck up again you mentioned j & j is hanging in there but down a bit. but merck seeing continued benefit from the results

yesterday. and bristol meyers down yet again, jim, after a lack of hope there, perhaps, on their front at least when they compete with merck. particularly the lung cancer indication. >> i can point out bristol meyers lost more market cap than merck gained i think of course tivo had a lot. the estimates are pretty bad i'm not seeing for what keytruda will do for merck. it's going to take a lot sael sales cut by 17% on the bristol-myers. i understand they have to have something else

and the note we saw last week fooiser was interested i don't know if anyone is interested here. >> i haven't heard anything that i believe. that was a bizarre note. >> a fair amount of upgrades today. you mentioned morgan stanley and twitter. we mentioned pivotal disney. dollar general you sensing renewed optimism on some of these? >> i am. facebook is up facebook is going to have a difficult quarter. but matt voss likes dollar general. matt doesn't feel that way i was concerned about dollar general. because when i went by the one they like, you know, it's kind of like a stake.

it's like the chinese embassy. >> just made in china. >> i buy my sunglasses there because people think they look like ray bans. $167 and i get them for $1 i fool everybody where are they made? in china i have matthew on tonight. we'll talk about the idea that dollar general is a chinese outpost. but not technology chinese outpost. >> right. >> you love the boss. >>well, matthew is the best on retail he made some -- he made a lot of moves for the stock last week. i would think you can. you tell us what is going to term the next leg. how strong is the consumer you won't get to the 3%. if the consumer is not spending like a banshee. >> spend their tax cut on debt repayment. >> and the one that is

leaderless but fabulous is lululemon. here is all time high. the cfo -- they named a new cfo. that's a lifestyle play. it's not an apparel play jeez amazon is up 28 points after getting out of drugs but more importantly, our president sees much more occupied with the notion of being president. it's a bit of a change of pace. >> yes. >> he's kind of focussed on the tax cut. kind of focussed on the american rebirth. he's not focussed on the u.s. postal service the stock had 70 points since the last blast. >> yeah. the white house had some other distractions, too, in the last week or so. >> yeah. and it's tax day i'm waiting. the president has said nothing to knock it down interesting. >> yeah. vix down close to 15 dow up 220 let's get to bob.

>> you know i am a happy guy for once, we're talking about fundamentals we're talking about earnings we're not talking about geopolitics. it's earnings that are moving the market 3 to 1 advancing the declining stocks and the earnings companies out are moving the rest around. let's take a look at the sector. consumer discretionary, and this is a simple start. you have netflix up 6% consumer discretionary goes up netflix is a monster in that space. tech is up because the momentum names, primarily, your semiconductors are doing it. a & d. everything is up more than 1%. health care is up because united health is dragging everything up good numbers from there. anthem is up humana is up banks all right. maybe a little disappointing everything else is doing well and helping move the market. energy is not a market leader today. we're in earnings season that's what i'm happy about.

when you take out geopolitics and take out syria, china trade wars earnings dominate the discussions. and earnings have been good. today we had eight s&p 500 companies reporting. all eight on the top and bottom lines. generally the guidance is good take a look you have united health they raised their full year value. johnson & johnson raised their revenue guidance goldman raised quarterly dividend from 75 to 80 netflix that subscriber growth was amazing that they talked about. and so if you look at the earnings companies that are reporting, you know, united health is up nicely. moving the dow jones industrial average. johnson & johnson is flat. it hasn't had a particularly great year put up the earnings board here goldman sachs, all right, maybe you're not happy about what is going on with the financials they're sort of flattish but maybe that's to be expected given the limited loan growth and kind of flattish curve we've

got. look at netflix moving tremendously there else where other new market leaders. china trade wars going away, the industrials are doing well you have your boeing and caterpillar and 3m and put together and you have 60 points on the dow those stocks have been more stable now the china trade war is out of the headline netflix, a lot has been said about it, but when you look at the numbers. you're dealing with $150 billion market cap company you have subscriber growth of 27%. revenue up 36% your price increases 14% your selling prices and guidance higher than people expected. it's accelerating 6.2 million s subscriber growth. that's amazing numbers finally, a final word on the peak earnings debate people were bomb boarding me over the weekend 20% earnings growth is good in 2018 but 10% in 2019 my attitude is, folks, it's

records. it's still growing it's way too early to make the call that we ought to get out of the stock market that's a third quarter discussion there's a lot that is going to happen between now and the third quarter. and my attitude is that buy backs and tax cuts the impact of that are not fully factored into the market i think we'll see more buy backs than people expected i think the tax impact will be greater than people expected and we're going to see revenue growth it's still accelerating. and when you have revenue growth that is still accelerating, guys, the above average earnings growth trend continues in other words, the numbers can get even better further out. so let's not talk about peak earnings now let's talk about that three months from now. and we'll have a more serious discussion up 220 points on the dow back to you. >> bob, thank you very much. as jim said earlier, goldman's earnings call is underway willfred frost is monitoring

that. >> i'm going summarize the earnings goldman sachs easily beat raised expectations in a way that other banks vice president done this quarter. both revenue and eps ahead of expectations r.o.e. impressive 15.4%. now trading the most in focus following disappointments last year they have delivered that up 31% year over year compared to jpmorgan up 7%. bank of america and citibank roughly flat the 4.4 billion revenue there. the best of three years. the strength focussed in equities rather than the historical area of strength fixed income but nonetheless, goldman sachs have done what they're meant to do this quarter. they delivered on strong trading in the elevated volatility environment. and just pause for a second and say on the call that they were pretty upbeat. in fact, about hitting the extra $1 billion revenue guidance they gave in the fixed income area of trading. they gave that guidance last

year the cfo is upbeat about the prospects of hitting that. moving on, there was a beat in investment management and banking was a solid number and in line overall in line but suggesting the pipeline has improved from year end it will be interesting to hear about that on the call, which they haven't got to yet. investment and lending was the best part of the numbers that was $2.1 billion. and with that in mind, this is the overall take on the numbers. they have written, quote, this was a big headline beat for goldman sachs but the real question is how much credit should be given to investment and lending results, which we've historically discounted. but overall, these are great numbers. of course, the question now will be whether they can continue to deliver like they have on this quarter for the rest of the year here is cfo martin chavez. >> we remain cautiously

optimistic help the economic growth, relatively positive investor sentiment, and the emergence of new market trends can remain in place. >> certainly, guys, if they do four quarters like this, i would think the share prices do better than what we've see now slipping a bit to flat. over the last week, goldman sachs ahead of the big six. >> we'll see what morgan stanley brings us. >> yeah. i love the model it's terrific. and it has much less volatility. he's done a good job what marty is saying on the call is what i'm thinking it's not the last good quarter it's the first great quarter and that matters tremendously. i think that when you listen to the bank of america call, which i thought went poorly. i think the analyst didn't leave enough you would think why isn't bank of america making the money? the idea of bank of america was remarkable quarter was just out of body.

that was a good quarter. so the financials still baffle me. >> yep it's hard to build enthusiasm in some parts of that space when we come back, a lot to talk about with steve ballmer today especially when it comes to your tax dollars. take a look at movement. ten year 2.84 and two-year closing in on 2.4. back in a minute. finally. 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... ...and four times less than vanguard. what's next, no minimums? ...no minimums. schwab has lowered the cost of investing again. introducing the lowest cost

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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. time for jim. >> we will resolve some things. martin nance will report lrcx. this will be the most important tech quarter so far this earnings season. if that stock takes out its high you will see micron, texas instruments, western digital. you will see all these stocks go higher. it will be the beginning of what

could be a terrific tech period. so watch because they do make all the equipment for all of the semis that are important. he tells a great story. he is a professor of good earnings. i really like him. that is the one to watch. >> watch mad money tonight and you called goldman for better or worse. >> i had a bad feeling. tonight i have matthew boss because there are some changes in the works about who is winning and losing in bricks and mortar. there are not as many losers as people might have thought versus say 18 months ago. >> exciting show. i wish if pepsi co that is for people who think young like me. when we come back steve

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good tuesday morning. welcome back to "squawk on the street." live at post nine of the new york stock exchange. a lot to come from david later on this morning. markets holding on to a nice gain. dow up 245. financials in focus. we'll watch that. our road map begins with steve ballmer. why the former microsoft ceo is holding shareholder meeting for america. >> the imf out with forecast. chief economist on why the global economy is on pace for its fastest growth in more than seven years. >> and an exclusive on the fight for the board. starboard's jeff smith in just a few minutes. >> plenty of earnings. netflix is up big after surpassing expectations.

the stock is up 70% this year alone. goldman sacs big beats on earnings and revenue. that stock not able to get it done down about 0.2%. j.&j., united health all coming up. it is tax day and the final day for millions of americans to file under the old tax law before switching to the new system, something a new wall street journal nbc poll says is more unpopular than popular. the white house remains optimistic about the prospects to fuel growth. here is the treasury secretary this morning. >> we are now at a point where we are comfortable with our three percent or higher sustained economic growth. there will be quarters where we are lower and quarters where we are higher. we are comfortable on track. the difference will pay for the tax cuts. >> let's bring in former microsoft ceo steve ballmer, the

founder of usa facts holding the shareholder meeting for america today and the annual report is out literally a gold mine of information. good to have you back. >> my pleasure to be here. thanks very much. it's a big day for american citizens. >> your report makes the point. our aim is to assemble numbers as a basis for informed debate which we believe is fundamental to our democracy. tell us what you want to accomplish with this before we dive into the numbers and what is the meeting all about >> well, we think at least at minimum citizens in the country should be treated the way shareholders would in any business. they should know the numbers. they should get an annual report where they can read what money, who put up what money? where did it get spent and what outcomes we just use government numbers the way we would hope government officials as business people would use the numbers to drive

decision making. and if you are going to have an annual report we are publishing a 10 k we thought let's have a shareholder meeting for people interested by the numbers as they are sitting there filling out their share and their tax filing. >> report is pretty wide ranging. you go into criminal justice. there is stats on poverty, taxes, health care, education. what to you is the headline in this >> i think the overall headline is essentially in the world of fake news and alternate facts there is one thing that you can count on to be nonpartisan and that is the numbers. we have a lot of great professionals at the government accountability office, census who are putting out the numbers. our government owes it to us to show us this kind of information and our citizens deserve it. we will step in but the number

one thing is numbers are nonpartisan so let's look at the numbers and ground ourselves in a set of common facts. >> they kind of are nonpartisan. when you are talking about debt and deficits you have the treasury secretary saying growth is going to help pay for the tax cuts. on the other hand we are looking at trillion dollar deficits returning as a result of the tax cuts. >> we don't make forecasts. that's not our business. what we do do is give you an accurate look at the past. gdp per person growth over the last 36 years has been 1.7%. the only way you get that to be increased is through inflation or population growth. well, we obviously don't want gdp growth through inflation and our population is only growing about 0.3% a year. half of that frankly is coming from immigration.

so we either have population growth or somehow turn around this gdp per person growth rate which the average of that if you look at the trend lines has been going down. i don't quite understand the argument but that is not what we are here doing. we are not making forecasts. everybody should look at the number and come to their own point of view. >> although, steve, businesses make projections. they have to plan somehow. so when cbo sees 3.3, 2.4, 1pist -- 1.7 do you disagree? >> we averaged about 1.2% inflations adjusted per person and you can get there but inflation is not buying anybody more purchasing power. i don't think that is the intent. maybe 1.5 to 2.5, something like that makes sense to me.

as i said, we give you the numbers. you take a look at it and make your own call. >> so you have given us some pretty stark numbers about the size of our deficit and public debt going up. do you worry about that or buy the idea that as long as the u.s. has the dollar and the reserve currency and treasury market not the a problem for the u.s. to take on that kind of debt >> on this topic i am going to be -- i don't know about partisan. i think we have to balance our budget. the more our deficits and debt grow the more obligations that we are leaving to our children. if part of our constitutional mission is to secure these blessings for ourselves and our posterity this debt and these deficits are not doing anything to help our posterity. >> steve vsh , we wanted to asku about what is going on in the tech world. we were focussed on ten hours of

testimony from mark zuckerburg on capitol hill. are you having flashbacks to microsoft when the doj looked into anticompetitive behavior between microsoft and facebook now? >> very different circumstances and situations. whenever a company gets questioned and particularly if they actually see legislation, sure. i think that gives me some sense of going back in time. i have no idea what is going to happen in this case. will we see legislation? will the ftc which generally regulates privacy step in? will facebook change its behavior the one thing i would hope is that facebook doesn't under respond somehow. i also hope the government doesn't overrespond. >> do you worry that it could create a chilling effect where

facebook won't go after the next big ching when it comes to acquisitions and won't continue on the growth path because it will be strangled in part by regulation >> the way i see the world you get these government actions which can change company's behavior and somehow the market as a whole continues to seize new opportunities. so on behalf of the future, if you will, of our industry and citizens around the world, no, i don't have any concerns that innovation is going to continue to proceed. >> we're in the midst of some tough trade talk around the world. it continues today and it's not just bilateral u.s. china. there are these chess games being played in europe as they try to assess the global picture for trade. are you encouraged by the fact that this administration is trying to break some glass on long standing problems

>> this is a very complex subject. again, everybody will have to form their own opinion. we will give you some information. with that said, trade is a very large part of our economy and our gdp. and if you will, tuning it could have very big consequences for gdp and how people are able to live in this country. with this said, as former ceo of a company that literally was seeing $10 billion a year plus of software stolen in china it's hard for me to understand how you change that without a little broken glass. i'm divided on this topic. economics class they taught you free trade is a good thing. i basically believe that but there are issues that need to be addressed. >> do you think that president trump's strategy can work? >> i don't know. i have no idea what it really

takes to make progress. i bang my head against the wall with government, without government on this topic for years. and i have no idea whether this particular strategy will pay off. good luck guessing on that. >> steve, just one last question talking about the future and i know it's hard to make projections. one of the bear cases for the economy lately has been short term rates going higher. corporations with a lot of liabilities, inability to refinance those and business models that have survived because of cheap credit. how acute of a risk do you think that is? >> i think it is a real risk myself. i think the same thing is true, something i studied more is rates moving up for the u.s. government which is a big borrower. i think these are very large issues. certainly as we have looked through the history, we actually

haven't seen as dramatic an impact of lower rates on economic indicators as the rhetoric, but if those rates come up, a lot of people are going to feel the hurt. we're looking with los angeles clippers which i own, we are looking at building a new arena. it does make me a little nervous to think about using debt financing. i think there are real risks out there. >> apparently the clippers aren't in the playoffs this year -- >> you had to hurt me with that. just had to hurt me. you better do a good job today on our shareholder meeting. that will make me bounce back. 10:00 pacific, 1:00 eastern usafacts.org. let's let the citizens of this country be shareholders because we all have a right to be. >> way to change the topic.

>> you were talking playoffs. what did you want me to do. >> i wanted you to make a prediction of which team you see coming out of the west. >> you're asking me to pick between my competitors. you never do this if it was a business topic -- >> it's a great report. we'll see you soon. thanks again. >> really appreciate it. >> on a whole lot of topics. when we return speaking of the global economy maurice obstfeld with us. also on the topic of microsoft be sure to stick around for closing bell. brad smith joining the program a first on cnbc interview. y i. 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. say carl, we have a question about your brokerage fees. 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.

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. a market rally this morning and the imf out with global growth forecast as part of spring meetings seeing strong growth. 3.9% for the global economy this year and next year. it warns the most obvious risk is trade. there is a broad based conflict involving big economies. joining us now chief economist of the imf, author of this report from their headquarters in washington. nice to see you. >> good morning.

>> so with the trade conflicts and other risks on the horizon more than 3.9% this year and next everyone is wondering is this gaz as it gets? >> our projections are that this is pretty much as good as it gets for now. our longer term numbers are a bit lower than this. we are also emphasizing that there are things governments can do now to prolong this upswing and to make it more resilient. >> one of those things you warn against is tariffs and trade conflicts. you say it is most obvious risk to growth. if we do see tariffs or further escalation in this tit for tat between the u.s. and china what type of hit to growth are we talking about for the global economy? >> it depends on how far things escalate. from the types of measures threatened so far a direct hit to growth wouldn't be that great. certain individuals and certain

industries could suffer. the big risk would be if these sorts of actions spook asset markets, spook stock markets and other markets. that could have a more serious effect on confidence and growth. >> who gets hurt more, the u.s. or china, if it were to develop into a trade war >> i think trade wars are hard to win. even if you win you lose. so i think both countries would do badly, both depend on a robust, resilient world economy. . >> i wonder what you make of some of the moves that china has made. today it is about ownership caps. i guess it is impossible to know but do you think they would have done anything close to this had this white house not tried to shake the tree >> i think we have known for a while that there are gaps in the

multi lateral trading system that elements of wto undertakings don't cover. it would certainly strengthen the system to extend those rules, for example, to services where the u.s. is a major exporter. >> it is tax day as we have been talking about. president trump out with an op-ed talking about the boost because of the tax reform. how do you guys analyze it the corporate tax cuts that we saw how much juice are they giving to the u.s. economy and how long will that last? >> our u.s. forecast for this year is for 2.9% growth. that's actually 0.6 percentage points higher than our october forecast which was before the tax bill and the spending agreement. that is a pretty substantial boost.

we see 2.7 next year. a number of elements of the tax legislation are explicitly temporary. we see growth moderating in the u.s. after that. this is also a factor for global growth. in fact, around a third of our upgrade for the world compared with our october forecast is coming from this u.s. fiscal stimulus. >> we have been trying to keep an ongoing list of the survey data that has been slipping. ism, nehb, architecture billings, nfib, michigan conference board. today it is germany's. is this about q 1 seasonal weakness or is something truly happening here >> it is too early to tell. this is broad based. it's not just the u.s. where q 1 growth will probably be below what we are forecasting for the

rest of the year. hopefully it's not the markets looking at the trade prospects and worrying about those but we have seen a lot of these indicators soften particularly in march. we have seen slightly tighter financial conditions. >> speaking of tighter conditions, strategist after economist come on the program and tell us they like the market. the only risk here they say is that prices will rise, inflation is starting to heat up. how fast do you see that happening right now in the u.s. economy? >> i'm certainly not going to make stock predictions. don't expect that. it is a risk. the u.s. is at full employment and at the same time there is a substantial fiscal stimulus coming online. we predict that will tighten the labor market further and reduce

the unemployment rate below 3.5% eventually. that will have an effect on wages and while that in itself could be welcome, wage inflation could feed into price inflation. we don't have much recent historical experience with unemployment rates that low so we could see inflation rise sharply. we could see it take a while. >> those are two sides that investors will have to try to figure out. thank you for joining us. >> pleasure. >> the chief economist at the imf. much more christine lagarde coming up thursday. starboard's jeff myth is at the active passive investor summit. we will get the latestafter th break. dow up 222. play "do it like this".

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let's get to the summit here in new york city. >> i'm here with jeff smith from starboard value. one of the most active activist funds. also the ceo, anything else you do >> whatever needs to be done. >> i want to start with newal. it seems like there is a lot you want to be done there. this has been interesting because martin franklin was a guest with us when he first joined you. he stepped off the board. did martin franklin lead you down a road that you would rather not have gone down? >> newell is a great company which needs change. the shareholders, the employees, board members all deserve better than what has happened at the company.

certainly that was the contest that we thought would have been best for the company and shareholders. it's not where we are right now. martin has been a good friend and good adviser. >> do you think you would be there regardless of whether martin had sort of brought the idea to you but certainly felt as though he was shopping the idea to a number of activists. >> so martin did not bring the idea to us. it was a company we felt needed a change in leadership. in order for it to be investable one key was finding an operator that we felt could operate the business better. i called martin after he resigned and had a conversation with him and really had a good

dialogue around the operational improvements that were necessary at the company and available to the company. having him as a part of our slate gave us confidence, as well. >> why do you continue to have confidence given he is no longer a part of the slate? >> as we dug in we do believe that there is incredible value at newell. it is brands that we have all heard of. elmer's glue, sharpy, a brand close to my heart because i played baseball. so it's a great company, great employees. unfortunately, it lost its way with this merger and it didn't go as well as it should have. $10 billion of value has been destroyed since the merger. the company deserves better. the shareholders deserve better and the shareholders have asked

us to continue in order to try to put some better people on the board and improve the case for change and the case for operational change and improvement at the company. >> when i report on this as i have been recently five board seats, showed up with a billion dollars worth of stock about six percent of the company. they gave him five board seeks. you are seeking four. you are up against the company, as well. how about a settlement can't everybody figure out a way to sort of go forward because i feel like you are in a position to win potentially a few board seats. i wonder given the clash with icahn whether this ends up badly. >> there is not a clash. it's a fun story. carl and i don't necessarily see things that differently. we have had conversations about the company. we both think the company is

extremely under valued and we think there are operational improvements that are needed. we both think it has been poorly run for the past couple of years. the difference of opinion is what is the best possible board have shareholders going forward. we believe that the shareholders would like a diverse board. there should be shareholder representation. we believe when we work with a company that it does help to have representation. we believe one representative on the board is enough and maybe two. really good independent board members. >> i think they are with the firm of the five. >> has four. >> four of the five are really direct representatives. it's his son. >> it's his son's college friend. >> it's his general council and his trader portfolio manager. the only -- >> doesn't sound like a great lineup to me. >> shareholders aren't happy.

if you remember what happened here was over a weekend. there was a settlement, a cooperation. >> happened very quickly. i don't think it is the right shareholder settlement for employees. if you recall our first communication was we will take a breath and try to figure out what we should do. that's a prudent thing to do. what we did was we sat back and listened. shareholders in many companies don't have great representation. the board is supposed to represent shareholders but often times we have to stand in between because sometimes the board is not listening to what shareholders want. in this situation during that period of time we really listened to the shareholders and asks if they were happy. the shareholders liked this

agreement? >> i think shareholders want the company to be run better. whether mike can do that or not i think there are differences of opinion. >> is a proxy fight in the best interest of shareholders >> i think it is about setting up governance to be proper going forward for the long term. if that means taking another four weeks to do that, that's a small time period in the future of the company. so much is happening at this company right now. >> do you need to reach a deal with newell, with icahn, with both or is it more likely to go to the vote >> i think if we go to the vote shareholders really want change and our slate is clearly better than what they're left with right now. in terms of a settlement, if we were to do that it's really both. you need it with the company and with icahn because he has an agreement. but as we talked about before

that really means it is just with icahn because he is pretty much if not controlling heavily influencing the company which makes everybody uncomfortable. >> i want to get to a couple of other things. i know you presented on real estate whether commercial or office or macy's back in the day. i understand that you're seeking board seats there, as well. >> it is a company we have a position in. we have not disclosed publically if we have nominated directors. we have been having conversations with the company and we are hoping like many other situations that we will be able to work things out without having to do anything publically. >> would you like to see ceo gone >> i think there are questions around the ceo but i will not talk about those now. >> do you think it is a valuable company and potentially should

be sold? >> we know it is a valuable company. we believe that it could be valuable for someone else and we think that it could be sold. >> when are you going to make a decision or will we hear something in terms of future of the company and board of directors? >> i think likely in the next few weeks. >> jeff, we get so many other topics and we are completely out of time. >> it's a shame. >> maybe we will do this more than once a year. >> we can try. >> jeff smith, ceo and founder of starboard. let's send it back to you. >> with newell brands up almost five percent. wae wae want to get to sue herera. >> here is what is happening. russian officials are accusing british intelligence agencies of fabricating that chemical attack in syria in order to pave the

way for allied strikes. syria is a russian ally and denies the deadly attack took place. international inspectors are conducting a fact finding mission in that region today. more than 150 people in hawaii air lifted to safety as flood waters ravage neighborhoods. arial video shows washed out roads, damaged homes and landslides. parts of the island have seen more than two feet of rain shattering all the other records. and a new development. prosecutors have been granted permission to read the comedian's previous testimony where he talked about giving qua lewds to women before sex. >> and the former fbi director's memoir receiving widespread attention over controversial comments. comey was fired as the fbi was

investigating russian interfe interference into the 2016 presidential election. thank you, sue herera. after the break netflix flying high this morning after reporting earnings that did see the streaming service add nearly 2 million subs in the u.s. alone. dow is up 230.

netflix surging after reporting better than expected growth. julia boorstin is with us now for more on the company's big quarter. >> netflix has exceeded expectations of subscriber growth as well as q 2 outlook for earnings growth defying concerns about saturation. what is driving that growth? adoption of internet tv, services such as comcast cable, investment in localized content.

and ceo says this is just the beginning. >> we are a fraction of the hours of viewing of youtube and linear tv. we have great momentum and we are very excited about that. we have a long way to go in terms of earning all of the viewing that we want to. >> hastings who is on facebook's board distanced netflix from the current challenges with ad targeting. >> we are very different from the ad supportive businesses and we have always been very big on protecting all of our members viewing. we don't sell advertising. i think we are substantially inoculated from the other issues that are happening in the industry and that's great. second i point out that we spend over 10 billion on content and marketing and 1.3 billion on tech. just objectively we are much more of a media company in that way than pure tech.

>> the marketing spent to draw new subscribers. though they generally have lower valuations we counted 17 analysts who increased the price targets on netflix shares since that report. back over to you. >> the list was long today. julia, this sense that they could raise pricing. i see numbers out today suggesting more subs at a higher. what is the talk about what they could potentially do pricewise >> i think it is interesting because you have to look at the u.s. market and internationally. internationally they are trying all sorts of things and they want to be flexible in terms of pricing being more aggressive to get new subscribers but serving their subscribers differently. in the u.s. there were these concerns that the market was going to be saturated. doesn't seem to be saturated. they added half a million more

than expected. they expect half a million more than projected. that indicates willingness to pay more especially when people are getting service baked into their cable box national ly the are sensitive to the fact that people have broadband access that people have in the u.s. >> what is current thinking on netflix versus disney as disney prepares to make a competing service? that was a bearish argument is that this is only a matter of time before it has a real content war. what are you hearing about that? >> it's interesting. netflix would point to specific

shows such as marvel shows. this quarter they said there isn't a single show that is really responsible for the subscriber growth and the upside surprise. there is a lot of concern that as disney pulled its movies from netflix which is happened in fall of 2019 that that could have a real impact on the platform. what we saw this quarter is that netflix is so diversified in the types of content offering that it is not that reliant on the disney content and has the ability to flesh out its own content when it loses the disney content. i think what netflix is trying to do is trying not to be a channel but a universe of cable channels and i think they are trying to do new things. >> julia, thank you. julia boorstin on the netflix quarter with the stock up shorply. when we return the u.s. secretary of air force joins us

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as stock surge waving a cautionary flag on the market. find out what has him so nervous right now on trading nioatn. there is a lot more "squawk on the street" right after this.

let's get out to morgan brennan at the space symposium. >> good morning. i am joined by air force secretary heather wilson at the space symposium. thanks for joining us today. so in light of the u.s.-led syria attacks over the weekend and the fact that the u.s. is getting ready to sit down with north korea and heightened tensions with china, if there was one message that you would want to deliver from the air force to investors and also to

the general american public right now what would it be >> we are accelerating defendable space and becoming more the influential force. i think one thing the operation in syria showed was importance of working with allies and partners. it was combined with french and british because we train together and work together and we fight together for the values that we all represent. >> yesterday here vice president pence talked about sort of the need to strengthen our space foot print, if you will. the air force handles more than 90% of military space operations. you also do a lot on civilian commercial side, too. what is the vision for doing that, for building on space infrastructure >> well, probably the best look at that is in the president's budget. this year's budget increases space spending from the air force by about 14% over the next five-year period which is a significant increase.

we are accelerating our defendable space, making assets more defendable and going to next generation gps. gps helps services and war fighters but also enables a huge part of commerce everything from farmer in iowa to a banker in new york to the timing signal in the new york stock exchange and the blue dot on your phone comes from united states air force. we enable that part of the economy. >> timing signal at the new york stock exchange puts it in perspective. we heard talk that the next potential war could be waged in space. is that the case >> russia and china are developing the ability to deny us the use of space in crisis or conflict. they are doing that because the united states is the best in the world at space. so we have to be prepared for that and we are working with our allies to be more resilient in space to take a punch and keep on fighting and working through because there is not a military mission that we do that doesn't in some way depend on space.

we have to protect that capability. >> a lot of folks don't realize how much money is dedicated to the air force. in light of that where are you looking to put the funds to work does the space force make sense in the greater scheme of thing snz. >> the budget in the president's budget for the united states air force is $156 billion budget. the priority for the air force is accelerate readiness of the force so we are ready to fight anywhere, anytime, anywhere. the second part is modernization so we are ready for the future fight some things we are doing in new space capability but the purchase of b 21 bomber, tanker. we have a lot of things that we are doing a bow wave of modernization. >> i would love to talk to you beall the things you are doing

in terms of acquisition, stream lining and cutting regulatory red tape. we would love to have you back on. please join us again. in the meantime, thank you. heather wilson. guys, let's send it back over to you.

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update on starbucks this morning, fighting the fallout of a video that shows two men arrested in a philadelphia, pennsylvania, location cnbc can confirm that kevin johnson has met with the two men involved earnings are next week when we do expect to hear more of the company's response. >> damage control mode there. meantime, president trump tweeting yesterday on currencies, writing, quote, russia and china are playing the currency devaluation game as the u.s. keeps raising interest rates. not acceptable treasury secretary steven mnuchin explained the president's move on ""squawk box"" this morning. >> warning shot at china and russia about devaluation china has devalued their currency in the past

matter of fact up through 2016, they devalued it significantly, starting in 2017, right after the president was elected. they have used a lot of their reserves to support the currency the president wants to make sure they don't change these plans and he's watching it. >> our mike santoli is with us >> of course the dollar has been a very weak trend against all currencies in the world. it isn't necessarily reflected in the numbers this is the largest currency etf, a bet on a stronger dollar. very steady downtrend. down about 10% on a 12-month basis. >> that's a devaluation game. >> exactly treasury secretary mnuchin's comments today, this idea that you want to warn other countries

not to devalue against an already weak dollar is kind of a ratification of a policy, you might think. you see that weak base this is basically mimicking the u.s. dollar index. if you want to see the inverse of this, the udn is a way to play the dollar falling. that's basically been a mirror image up 10% on a year-to-date basis. more interesting is against the individual currencyies. you also have these single currency pair etfs out there, including fxe, basically dollar/euro. the eur o has been extremely strong, confounding expectations, up about 15% in the last 12 months that's also, you see there, kind of plateaued a little bit. this is basically chinese currency in dollar terms you see there, that's the value

of the chinese currency climbing. >> all this happening as the fed continues to talk pretty resolutely about maintaining pace of hike this is year. >> exactly and, of course, some may be arguing that the real target of the president's tweet was, hey, fed, be careful there. you don't want to get the dollar too strong. >> i don't know. >> it's hard to determine that zblie think he's willing to tweet about the fed, toochlt i don't get the warning shot comment from the treasury secretary. >> it comes in the face of sanctions. >> that's why the ruble is down. >> for russia, absolutely. >> this whole notion of tweeting about it's probably how foreign countries feel about missiles, it's the way he tweets about currencies, it's a little unsettling. >> starting in 2016, china used their reserves to support the currency that implies they're actively doing the opposite of what the

president is warning them not to do >> the etf spotlight, very good one. maybe your best ever. >> guys, as we're talking, climbing as well, hanging on to some gains, adding to it, dow up 260, s&p above 2700. got to go back to march 21st for the last time. wilbur ross will be with us on thotr e heside of this break "squawk alley" starts in a minute ♪

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