crosoft three years ago, intel. >> i like it >> 14 times earnings and 2.3% bigger than yield. peg ratio of 1.5 and it is a half percent away from an 18 year high. it is going hit that and people are going to pay attention i really like intel here >> erin, thank you for being here as well >> that's for us the dow is up 200. "power lunch" begins now >> i am melissa lee. two for tuesday ton streets. it is all about earnings and the economy. we'll go inside the numbers.n netflix and thrills. time to bing on the stock. a taxing problem taxing internet sales that could be an internet changing moment for amazon and anyone selling online "power lunch" starts right now >> welcome to "power lunch," i am sara eisen, the dow is moving

triple digits of ten of the last twelve sessions. nine of those seeing moved of 200 points or more microsoft is helping two and th bonds are making moves at this hour nine and a half years high. twitter is soaring on the back of an upgrade from morgan stanley. everybody loves pizza. dominos is hitting a new day going all the way back at the time of its ipo. >> tyler >> good afternoon everybody, i am tyler mathisen. the ims expects the economy to grow just under 4% this year that's the strongest pay since 2011 walmart is planning the make over the retail giant. it is ongoing battle with amazon and we are watching ibm stock.

it is higher after the bell. we'll take a closer look at what the tree expects that's ahead on "power lunch." >> i am michelle caruso-cabrera. bob pisani at the new york stock exchange with more hey bob. >> 3-1 advancing i want to show you something more important volatility is collapsing take a look at the conviction and its volatility we are down six days in a row. look at that, straight down, folks. we are now 15 essentially. we were 20 a week and a half ago. so volume has come down and if you take syria out of the headline and china trade out of the headline, you get the markets itself earnings are good and volatility drops dramatically sector here today, leaders you want and technology stocks and a lot of semiconductors doing well >> netflix is in that group here

and boeing is doing well and t caterpill caterpillar. >> let me show you the bank, nothing is wrong with the earnings here, comerica had good numbers and texas banks. they don't seem impressed overall here nothing's wrong with earnings with regions bank and sun trus s banks. today they are taking profits on it they're selling off, that's another week group transport was great yesterday and finally, staples are not doing much, not a lot of move here and pepsi and procter & gamble there and colgate-palmolive on the weak side >> thank you, bob pisani the market always keeps a close

eye in washington for news on taxes or trades. cayla tausche is joining us with the highlights >> hey melissa, it maybe tax day, lawmakers made headlines this morning on trade deregulations and a whole host of other issues like the president's tweet criticizing current devaluation. here is how secretary mnuchin describes the president's tweet. >> wanting shots at china and russia of devaluation, china devalued their currency in the past and as a matter of fact, up to 2016, they devalued it significantly starting at 2017 right after the president was elected. they used a lot of their reserve to support the currency. the president wants to make sure they don't change these plans and he's watching it >> mnuchin was also asked whether he was optimistic the u.s. could have a trade war with

china? >> larry and i were together with the president yesterday and as i said he's involved in these discussions and all the specifics. i am cautiously optimistic and you will know when we have a deal >> kathy mcmoore rogers, the chair of the republican conference in the house have been conveying retaliations on farmers in her district in washington state >> i have urged him to pull back from across the board type of approach that he was talking about steel and laluminum i was pleased he's coming back on the table with ttp. that'p. tyler, a new headline on nafta a canadian official confirming to cnbc that the three trade add

minute sta administers from the u.s. can, canada will be meeting here on thursday >> they may be narrowing their differences on nafta thank you very much cayla tausche >> our investigators have been piling back into the markets we have fallen into an 18-month of 29% that's down from 41% over weight in last month. at -- david, i am going to begin with you and our in troe today, we pointed out of the difference of the 2-yr note and 10-yr note

when you get that kind of flattening of what's known as the yield curve, it is often not a good sign and i note in my note that you are concerned or keeping your eye on the other side of the matter and that's any material widening that is greater yield difference between high yield bonds and treasuries. does what the bond market is doing, does it scare you at all? >> oh boy, tyler, that's a great question and something that we c can spend hours on the bond market have not been the best predictor of growth over the last few years. i mean treasury and 10-yr. >> translatohave been handed down the 2-yr is on a cycle high. the feds are going to continue to raise rates and maybe faster

than expected. if the market does not anticipate the appropriate level of feds hike the market won't respond well to that as well >> jeremy, i think you and david share the view that corporate earnings are going to be good in this first quarter and throughout 2018. al conce a concern of yours is inflation and another is higher interest rates. are those the two things that could potentially cause head wings for equities >> yes, those already have caused head winds for equities what you see is the 10-yr treasury yield is backed up. and it is a reflection of the fact that inflation is normalizing and during this period what we have seen despite the fact that earnings have been very good and as you mentioned earnings look like they should

be good all year the pick up and inflation combined with other furious on trades that the earning ray owe for the s&p 500 have derated the combination of wider stock prices and robust earnings momentum >> we just had it on the screen that your over weight financials, i want to ask you about goldman sachs, it is the biggest loser in the dow after what was another decent quarter. what do you make of these less th enthusiastic reaction that investors are having better than bank quarters. >> the financial is broadly in line to slightly better than expected the market reaction is a near term and concerns on sustaina e

sustainability >> we did not see big on the in core loans growth. there could be some choppiness it is going to translate to better fundamentals and capital market for activities for both commercial banks and capital market sensitive names this group now trades under 13 times earnings and earnings are like toy tly to grow 20% and tax reform given their domestic -- >> david, i don't know how you feel of financial, it seems like no coincidence on a day where we see the yield curve at the flattest is 2008 and it is now 2007 and financials are having difficulty trading higher. it seems like this group, no matter what the fundamental case is, is being held hostage by

this yield curve >> one of the reasons we prefer financial in this environment, we expect the curve to steepen, it has not done that part of that being increased in the two years and the 10-yr held down the other thing to keep in mind that the market particularly in days like this is gravitating towards large cap growth stocks for late cycles. that's where you pay off for growth when growth becomes scarce financials don't fit into that group. on a day like this, flat yield curves and stronger earnings, that's going to take money away from financials. >> you are encouraging people to stay with them and you like the financials and feel the curve turns at some point, improve >> yes, from a valuation perspective, the regulatory environment favorable for financials if this economy is going to continue to expand, we are going to have to see a pick up in loan

volume and that's one of the things that was not favorable with first quarter earnings. we'll have to see that >> thank you, jeremy and david, appreciate it. this afternoon, shinzo abe is visiting president trump in mar-a-lago and eamon javers. >> reporter: this is preparation for the summit, president trump and the leader of kim jong-un, it does not have a specific time line yet the u.s. side wants to meet with the japanese side to make sure they're taking all their concerns and security concerns the other main subject here is trades i had an opportunity to ask larry kudlow in a briefing what

the president have said to him on tpp and whether or not the united states is engaged in the japanese side on reopening and revamping negotiations with the japanese larry kudlow says he does not think anything is going to come from that. he says there is been discussions and considerations of tpp they have broke the subject with the japanese side. he says noithing concrete have been done before that's where that stands and another item that's possibly on the agenda here is revise 232 tariff exemptions for the japanese we'll see the two leaders meeting here and we'll see the two first ladies going on an event here today they'll have dinner later this evening and tomorrow we'll see a joint press conference between the two leaders as well. a lot is on the table here one thing i should tell you that

larry kudlow in the briefing was informed of the apparent issues website that we are seeing today on tax day of the irs. officials here is not aware of whatever problems the irs is experiencing on tax day. >> eamon, thank you very much. >> this is their sixth meeting, shinzo abe and trump this is a relationship that abe worked really hard on. i think he lost the golf game to president trump. >> he invested a lot and he needs something out of this. he needs a win >> he's in trouble back home >> so we'll see the polls waiting for the president here in the united states as well >> meantime, shares of netflix are soaring. the company surprising the street in a good way growth have to slow down at some point, does it. >> a southstwe plane making an emergency landing after an

engine blew in one of the holes in the plane we'll get you the update, coming up ♪ 85 and i wanna go don't get mad. get e*trade, kiddo.

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 "power lunch. we are watching netflix. shares are dominating. more than 20 firms upping their price targets. one of them raising their targets to 350 on the stock. joining us is michael graham, thank you for being here

>>. >> thank you.net fli how do you know when the stock gets expensive >> i think you can argue already it is expensive if you look at it on an earnings basis. one of this things that help people pay more for netflix stock is it is a subscriber model so you get a ton of recruiting revenue or highly visible and porimportantly you it on the hit where you said the most important thing is subscribers. of all the international countries that it is in, it is early penetrating those audiences. we think it will continue to grow and add 70 million more subscribers between now and the end of 2020. those are just really big numbers. >> any questions of the cash burn of $2 billion over the last 12 months and marketing expenses

keep on rising the view from investors seem to be as long as they can add subscribers, they can spend however much they want >> you are totally right >> the content and the market is growing. margins are going up and revenues are faster. the subscriber strength is coming from the strength of the content. some of the new i thinthings th netflix are doing are doing coming to strength those are all moves that are hinged on netflix being able to spend billions of dollars a year to develop great content that the viewers like to see. we think they're going to be able to continue to do that and they're really one of the go to places if you are a movie producer or creative talent that has an idea for a great show netflix is a place where you

would like to end up and building a strong content position >> to me, netflix is one, a network of the television sense by a different name and a different delivery mechanism two, it is a studio by a different name maybe not a different name because it is producing stuff. what i am interested in and you know in television we have a metric that we look at closely and it is time spent viewing what do we know apart from subscriber growth which has been phenomenal of time spent viewing on netflix >> i think netflix knows that very well and as outsiders looking in, we don't know that, however -- >> you can extrapolate >> yes >> i think you can extrapolate that it is good and partially because of the increases and so they're able to affect increases of 14 years year over year in this quarter and that's a

combination of different things. >> revenue per user. >> families will buy a plan when they can have more streaming and higher resolution and things like that. that's a sign that households are valuing and there is subscription a lot in one of those things is if you are spending more time watching that content, the content becomes more important to you then you are going to go ahead and pay more for it. >> also the whole idea, binging -- >> my son spends ten times amount of time >> and watching "stranger things." >> michael graham, thank you for joining us just one of the 20 analysts to raise the price target on netflix today. >> all right, sara. a southwest airplane forced to make an emergency landing we'll have the real story behind

tesla's production "power lunch" will be right back "street talk" is sponsored by wisdom tree. to learn more, visit wisdomtree.com

welcome back everyone to "power lunch." developing story right now a southwest airline plane have been forced to make an emergency l landing and phil lebeau has all the details.

>> this plane is on the tarmac and too much activities out there for them to take off the landing. it will be lifted in the next hour or two. the engine debris from this engine failure on the right hand side this is highly unusual part of it flew out and hit the window, knocked out the window on that plane in row 17. uncontained engine failure are highly unusual usually you have an engine failure, you do not see it there was a report that a passenger was partially sucked out from the window and had to be held in again, you have this engine failure creating a ground stop in philadelphia. this as boeing 373-700 investigators are on the way from the faa as well as the ntsb one passenger seriously injured

at least that's the report at this point >> phil, there are report that is one of the passengers face book live on the way down so we may be seeing videos at some point or another discussion about facebook and being able to go live under all kinds of serk. of circumstances >> that's understandable any time you have an emergency like this and people are going to be freaked out. i am sure a lot of people seeing that video and again, i cannot stress this enough uncontained engine failure are extremely rare and the fact that you had a piece of this engine flying off and knocking out of the window, that's really really unusual. >> what kind of the plane? >> it is a boeing 737-700. this is the work course for the southwest fleet. this is one of the ge saffron

engine on the plane. don't know a whole lot of details other than that. this engine is monitored by ge as well as the airline they'll get data on what caused the engine failure >> a real reversal can happen trading much lower, $6 is the lower today. the company is holding production three, model three production and they say it is planned. but credits say it is unheard of when you are ramping up of production of new vehicle. >> part of the problem here is tesla is a black box you listen to elon musk, oh, we are at 2,000 vehicles per week or model three we expect to stay at that production rate and production is improving and production is increasing and sure we had too much automation and the company says you know what, we are

dpoigoin to stop production for five to five days while we work on automation when you are ramping up production, inevitably, you will have these down periods and all autoplants and maybe not to this degree but autoplans do take periods where they go down the line or they'll stop the line when they're updating automation on the line or working with other robots on the line if you are a tesla investor, what do you believe? do you believe elon musk last week or the fact that they stopped production it is hard to figure out where they're going to go from here. >> it is a good thing that gayle king made a visit last week verses this week >> phil lebeau, thanks >> it is tax day you can soon be paying more taxes on the things you buy online we'll talk to a man who llcas it

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hi everybody, i am sue herrera, here elis your cnbc update antonio guiterra is urgiining si to cooperate russia is speaking out the kremlin says it does not understand the basis of those allegations adding no evidence have been presented. an investigation is under way of a deadly crash involving multiple semitrucks, it happened on interstate 10 about an hour west of phoenix, unfortunately, one person was killed in that accident >> a rare home run at the new york mets game bryce harper breaking his bat in a .406 foot home run the bat is broken, leaving

harper with just the handle. 8-6 in yesterday's game. you are up to date that's the news update at this hour, sara, back to you. >> thank you, sue herrera. >> let's check in on the rally at this hour the dow and s&p 500 is at their highest level. nasdaq is leading the nasdaq at 100 roiight now marathon and humana and among them and raytheon. the spread between the 2-yr yield and the 10-yr year is at the lowest level to dominique chu now >> the last few moments or so, we are watching shares of defense contractor like raytheon and northrop

they also go onto say that some of the administration's possible sales strategy will be to call for members of the trump's cap net abo cabinet to help seal larger deals. that's according to sources familiar because of that, we are watching a number of these defense contractors rallied a high we know raytheon hit a record high >> thank you, dom. >> so today the supreme court hearing a case that'll affect what you pay when shopping online ylan mui is joining us with the details. >> the issue here is, the justices this morning is sounding torn on it. the hearing was combat i've of

the start on the other side, th ruling is out dated and it is the court's job to fix it. states and online retailers have different numbers for how difficult it would be to collect that sales tax and that cause confusion among justices while implementing a collecting system can cost to $12 to $250,000 this questi there is been several bills in recent years and none of them have been successful all eyes are in the supreme court court and they are expecting a decision inj june. >> it would take us back to the days of taxation without

representation >> great to speak with you >> absolutely. >> what do you mean by that? >> what happens is if you don't have axis, this is all about set aside the internet and sales taxes. they're deciding whether business in one state can be taxed. if there is no physical prese e presence if you have a store in kansas, kansas can tax you if you are selling something through catalogs or what the original case is about, there is no taxes and they cannot tax you from another state politicians love the idea. if they can tax businesses and other states that cannot vote against them the workers they hurt will never be able to vote again and they love the idea of taxing someone who does not live in their state. >> what do you say to the businesses that seal up their cost disadvantage because somebody in their state can by

from somebody out of state and not pay the sales tax and they're going to lose on price t >> the shipping cost is always more expensive than the cost of the tax so that's really not a challenge. and, there are few instances really, amazon pays taxes and all the states and all the major companies do, you are talking about going after the thousands of smaller people and telling them they're 10,000 taxed in jurisdiction get it wrong and you can get sued by your customers from the trial lawyers because you are charged too much or little and the tax collector can go after you. that's really unfair for a small business struggling or a large business would have a hard time doing it nothing stops them from exporting corporate income taxes across state lines and the fact that you are not in their state won't matter anymore

this is all about taking the corporate income tax and exporting it there is a bill to ban that. the democrats have never passed it and it gives you every sense of what their real goal is if you have a company and you sell across state line, this is about you and not just internet sales. >> all the stocks involved here, they are higher today. whn you read the assessment of reporters in the hearing, they think the justice sounds very skeptical. are you optimistic that the supreme court is going to rule the way you want them to >> we are optimistic because of what you just said this is something that the public sector union wants because they want to squeeze more money out of the economy and they love to be able to tax people across state line it is a bad thing to do and it is breaking precedent and it is no problem it would be good if the court says we are not going to get involved in this

if the court does this, how do you explain to the europeans of what they should not be able to do on facebook and what we are talking about letting texas do on iowa. >> you know people ignore the possibility that potentially if you allow states to collect these online taxes that this could strengthen amazon position it would put them out of an advantage selling at their own platform >> absolutely. >> that was years ago, and he's quite correct. that used to be amazon's position and now they're in all the states and they collect everywhere they are the big winners of forcing small people to pay amazon to use their software to collect sale taxes amazon would benefit from this, if smaller companies would not benefit. this is hopefully the supreme

court will say a previous ruling is quite sufficient. >> you are saying that based on the fact that amazon can sell those and level the plain field and if third party sellers could not under cut amazon is not your argument they would be forced to get more services to amazon >> they have to get on somebody else's platform which has the services to do the software. only big characters are in the market would be tieable to manae this and smaller people have to pay for that >> in terms of the spirit of this grover, the spirit of this is to protect the mom and pop businesses who offer brick and mortar fronts, can it be used in your view and an effective way to help protect them >> that's what people say what the reasoning is, there is an easy way to fix this and reduce

the sales tax in your state on you. >> that's what they offered in a number of states and they said if you don't like the disparity on internet sales, let's cut the sales tax on you those big boss companies should be out there fight for lower sale taxes to protect their customers and not taxing for somebody else. >> grover norquist, thank you. >> it is so hard to lower the sales tax. >> impossible. >> investors clearly believe that things went really well or those companies. >> yes absolutely >> tyler >> up next on "power lunch." we are going live to morgan brennan, she's there, what's up? >> hey, tyler, that's riepght. it is the biggest conference of the year, you got ceos and investors that'll be speaking to other in investors

we'll talk about what he's looking for in companies and what's the flood signaling of this new space race that's coming up. imagine traveling hassle-free with your golf clubs. now you can, with shipsticks.com! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call we'll pick up and deliver your clubs on-time, guaranteed, for as low as $39.99. shipsticks.com saves you time and money. make it simple. make it ship sticks.

well, the largest space conference of the year taking place today and all the big names in the space industry are there. maybe somebody will take a place on mars. today, colorado springs and morgan brennan is there.

>> reporter: joining me for an interview is the coo of college national he's a founding partner at space angels >> thank you for joining us. >> why are you investing in space. >> space is the hottest to invest in right now. i have a personal passion for the industry if you look at what's happening and some of the investments that are out there, justifying investments, it is pretty extraordinary. i will give you a couple of examples if you look at driving cars and collecting data from space or printing products or services around that. that's a huge industry as well >> reporter: when you connect space and starting off better and transform the industry to technology, does that mean that the valuation for tech would

make for space company as well >> well, good question if there y are more of an -- if is more hardware and space or launch companies, those would belower than traditional tech valuations >> reporter: i would imagine a high risk and high reward as well where are you investing and what companies you have been putting in the early stage >> sure, two areas, one is launch getting nasa to orbit and space x is the most prominent. we have reusability which is a big factor of reducing the costs as well and data, this is optical imagery of the earth and infrared imagery of the earth.

driverless cars and things like that >> reporter: i am hearing all these cool things of things that's happening in space, how do i invest? >> a lot of these companies are private and i don't think they are changed for a while. >> it is not for the change of heart. the ratio of companies actually making it very small i would say find a trusted partner if if you can find a specialist specializing in an early investment or like space angels for others, do that. find a partner that understands the industry and under ride and do due diligence in these companies, that's really important. >> reporter: when you see a company like spacex and of private company and tech and cords just doing another round does that make sense to you? >> if you look at long enough

term out, yes, what we have been talking about is everything is lower orbit and when you talk about in space, this is the moon or mars and enabling the next generation of economy, five years from now, spacex is the only that has the capability if you look forward, it is justified but maybe not in the short term but long-term it could be >> dylan taylor, founding partner from space angels, guys, heading back to you. >> morgan brennan, thank you, investing in space now with the new alert of starbucks. >> starbucks will be closing more than 8,000 companies in the u.s., this is going to conduct a racial bias and education geared towards training and preventing future discrimination in stores.

>> it is going to to become part of the on boarding process where new partners is of course comes on the heels of arrested of two men in philadelphia, the ceo kevin johnson did meet with yesterday and adding during this training partner, we'll go through a program that's designed and biassed and preventing discrimination and inside a starbucks feeling safe. and former u.s. attorney eric holder that starbucks announcing this new trend that's going to have in the average of may 29th they're going to assess how this goes and give that information to other stores in the future. the stock is up nearly 1% today. >> okay. >> i am sorry? >> what percentage of the stores

in the u.s.? >> i can tell you this is 8,000 of their stores in the u.s., it will be just in the afternoon and provided nearly 175,000 of their partners >> will the store closed during that time in. >> just a half afternoon it will be a half day choesh >> how are they going to execute this >> i'm assuming it will be done in store they did not specify where the training is going to take place. >> i think it speaks to the fact that this is a company in damage control mode kevin johnson apologized clearly that wasn't enough to put an end to this story it's all over social media, not affecting the stock but clearly they feel they have to get out front and continue to make this -- >> and they're moving. one can criticize whether they move quickly enough as our guest yesterday did, but -- >> they don't want this to happen again >> clearly not nor should they. two big names in the dow reporting results today, already heard from goldman-sachs this morning. everything you need to know

about these earnings reports coming up on "power lunch. i am an independent financial advisor. when i meet a new client, i start by asking questions like: did you understand all the fees you were paying? was your broker a fiduciary? were you satisfied with the attention you were getting? then i explain that being independent gives our firm more freedom to act in their best interests. independence lets us do that. charles schwab is proud to support more independent financial advisors and their clients than anyone else. visit findyourindependentadvisor.com

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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 goldman-sachs reporting a big earnings beat today. revenue and eps coming in well

over street expectations as trading revenues jump 31%. despite that beat, though, take a look at the stock, lowered by more than 1% joining us now is capital markets analyst with ubs hey, brendon thanks for joining us. >> hi, michelle. >> at the top of the show, bob came on and point out volatility is collapsing. a lot of people think these banks did very, very well last quarter because volatility was so dramatic. to what degree is the stock falling today because maybe that volatility is not going to continue and therefore not contribute as much to their trading revenue? >> well, i think that's definitely a component of the concern. you look at the equities revenues across the bullish bracket. investment banks that have reported, and they've been 25% year over year growers or better, and the equities business is where the big beneficiaries of that volatility, especially the derivative desk. so, goldman was right there with the leaders at -- in excess of 30% growth so the equities

business certainly wasn't the issue. one of the things that happened, the stock had started to fade into the conference call and then the cfo, marty schwartz, said they were not going to be buying back stocks they were going to be stopping the buyback in the second quarter in order to build capital to support growth, and that really added to the fade and added some momentum behind that >> how about also the fact that when it comes to fic trading, fixed income currencies and commodities, a big boost there and that was goldman-sachs' core dna for so many years, number one, number one, number one. they finally seemed to have regained a lot of market share but a lot of investors wanted even more. >> there's no doubt that's true. the ficc revenue line came in, in line with what we were expecting, but really all that did was get them back to gaining the share that they lost last

year and they weren't able to add any share, which the bulls were really advocating that they should be actually adding share in an environment where volatility had picked up so much, and as you say, now that volatility's come down, are those gains -- are the regains going to be sustainable, you know, and much less, can we really count on them to add to it >> that's reflected in your rating you've got a neutral and a price target at 260, trading at 253, so pretty close to that. what would make you change your mind what do you have to see that would lead you to have more belief in this stock >> so, i've got some concerns. look, it's not that i dislike goldman, necessarily, but you know, i'd prefer morgan stanley. i think that the business mix is better i think it's worth a higher multiple there, you've got half wealth and asset management, your earnings base being wealth and aetna manageme asset management which to me is a higher multiple business it's a repeating revenue source rather than needing to generate

a transaction, whether it be in trading and investment banking every time so i just generally think those are higher multiple businesses and therefore more attractive right now, they're trading at parity, and so i feel like it's far easier to construct a bullish argument around morgan stanley. here we are late in the business cycle, goldman-sachs is beginning to grow this unsecured consumer lending platform and markets, i'm very concerned about how that's going to end. >> i was interested to ask you about that as well but we are out of time. brennan, we appreciate you calling in brennan hawken big interview tomorrow on cnbc lloyd blankfein is going to be on "squawk box." michelle, mark zuckerberg's capitol hill appearance may be over but the troubles for facebook aren't going away any time soon. we'll take a look at some of the problems it is dealing with right now. plus japanese prime minister shinzo abe visiting president trump at mar-a-lago, expected to

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i'm michelle and here's what's on the menu breaking technical levels, positive for the year on some of

the major averages and so far, the best earnings growth since 2010 so, are the bulls back in charge on wall street or are there head winds around the corner? and is big blue back ibm reported its first revenue growth in nearly six years last quarter. are they going to be able to deliver again tonight? we've got you set up with the number one analyst and also a biotech breakout. it's up 10% in one month, 136% in a year, the ceo of mystery stock joins us for a look at what's driving the growth. "power lunch" starts right now good afternoon, everybody, and welcome to hour number two of "power. i'm tyler. thanks for joining us. stocks rallying, second day in a row, dow and the s&p hitting their highest intraday levels in nearly four. right now, as you see, the industrial is up 213, nasdaq up 124, s&p up 28, all sporting those latter two sporting gains

of 1% or greater yields also on the move. two-year yields, highest level since 2008 the fang names moving higher with netflix leading the gains, following its blowout earnings late yesterday alphabet and amazon, they are up as well, and facebook higher by better than 2% and some big gainers in energy where are they multiyear highs. all-time highs to tell you about. humana, raytheon, fleer. >> humana. here's what's happening at this hour housing starts rising in march driven by a ramp-up in multifamily construction however, single family construction fell which could mean continued inventory shortages. on tax day, the irs direct payment website is down. the page letting taxpayers pay dire directly what they owe from a

checking or savings account. a southwest plane had to make an emergency landing at philadelphia's airport due to an engine explosion midair, the debris from the engine blowing out a window on the plane. is faa is investigating the incident and there are no reports of injuries so far all right, i'm melissa lee we begin with the markets. bob and mike on the floor. mike, you're taking a look at some level that could mean the difference between a nice bounce and a correction is over moment. >> yeah, i think the s&p's probably about 2% from that level, 27.50 is a level a lot of folks are looking at i do think it's interesting right now, 27.08, almost exactly halfway between the all-time high of january and the intraday low of february, early february. so it does seem as if the market is moving the chains, move investigaing in the right direction now people will say, we've proven something emphatically right here i will say we spent most of march above current levels, so obviously, it's not that long

ago since we were up here. >> and what i find interesting is if you take china trade issues out of the headlines, which they are, you take syria out of the headlines, and market looks inward, does some naval gazing and looks at earnings, it likes what it sees we're up five out of last seven days in the s&p 500, melissa and i think that's very important, and one thing that a lot of people have asked me for, i just want to put up the bank stocks, they keep saying, what's wrong with the bank stocks the earnings are fine. goldman was fine yeah, they didn't do a buyback but generally, they're not doing well really reacting to this i think part of the problem is this yield curve that's really fat. if you can put up the spread, it's at a ten-year low 42 basis points. remember we were 60 just a short while ago. >> you know, 60 is the two versus the 30-year now so it's been a general flattening move it's been a head wind. usually it's not really critical until it's truly flat or negative but it definitely is something that's given pause to the financials but the

technology stocks in a very familiar pattern are kind of carrying things largely. >> in thames erms of that corre is over, though, it is the second biggest sector. we can't really be out of the woods until financials also turn the corner along with technology, right? >> well, unless they don't -- if they stop going down, i think they could be okay but yeah, you're absolutely right. i think as they say, the market has a little more to prove consumer discretionary is doing very well too. of course that's amazon and netflix in there as well i don't think you can pencil in back to the new highs, especially with financials not acting that great but you know, financials on a 12-month basis have outperformed but they've had these long periods of doing nothing and back filling and things like that so i guess you'd have to wait and see if, in fact, this is just a sector capped into the bond market right now. >> just to show you how much more comfortable the market is, without syria and without china trade wars, the vix has gone from 20 to 15 in 8, 9, 10 trading days, 20 to 15

>> yeah. things are a lot calmer these days guys, we'll leave it there thank you. global growth this year shaping up to be the best since 2011 the imf out this morning with a forecast of 3.9% growth this year and next. both europe and the u.s. got an upgrade to the forecast but the i imf warn the trade tensions and tariffs are the biggest risk to these rosy outlooks. kevin, there is this idea and the imf chief economist told us in the interview this morning that this may be as good as it gets, this year and next year, in terms of growth you've heard bob talking about peak earnings. you think that's limiting some of the upside effect of the good news we're getting >> i do and i think this reaffirms the solid economic foundation that's in place today that is supportive of higher stock prices across the globe for the next three to five years and i would even go further to suggest that we are at the beginning stages now of a new bull market that's going to be driven now more by earnings

growth and economic expansion as opposed to the 9-year-old secular bull market that was driven by central bank intervention and political posturing. >> so that flattening yield curve doesn't send you a message to be worried. >> no, because i think the fed can deal with the yield curve by reducing the size of its balance sheet. they have tools in their arsenal. one is raising short-term interest rates the second is unwinding their balance sheet. >> but what signal does that send what is the bond market telling us about the fundamental outlook of the economy >> i think it's telling the federal reserve they now need to explore a second part of their tools and that's actually unwinding their balance sheets, selling bonds off their balance sheet and returning to a more upward sloping bond curve. >> let's bring you into this conversation good to see you. we're having this conversation about earnings and how much the market is reacting, you know, not so much maybe with the banks

and those better quarters but we are seeing it in some of the other stocks, unh, johnson & johnson and the dow. is the earnings season going to bring the rally back on? is this going to continue? >> so, from our perspective, we expect the earnings season to be positive now, some companies will probably have a lot more positive expectations in the stocks versus others however, the underlying message from this earnings season should remain that the u.s. economy remains in good shape and we're about to experience a very significant fiscal stimulus in the form of tax reforms, and that should translate to higher business activity and higher consumer activity, which you already started to see on the bank side. >> a lot of people make this argument, kevin, about the tax cuts helping the economy and earnings the market is down since the tax bill was passed in the end of december it ran up all the way until that isn't that sort of discounted >> i think it's been discounted

so much now, we haven't even seen the full benefit of those tax cuts, which we likely won't see until the second half of this year. but as that does unfold, we could be in a scenario where the fed starts to raise interest rates here while the rest of the world maintains interest rates at their current levels. what does that create opportunities for? international stocks, emerging market stocks. it speaks to the benefits of having a globally diverse -- >> what worries you? >> well, clearly, geopolitical risk is probably in the top of my list. history is riddled with examples of geopolitical actions or mistakes that have led to either economies going in a downturn or, you know, or even worse. so, i would probably put that at the top of my list however, we like to think of the geopolitical risk as having a longer fuse and not really manifesting into anything more dramatic clearly the trade talk, the

tariffs, is also another risk. again, here, we hope that the cooler minds prevail and this rhetoric doesn't translate into policy >> all right, gentlemen, we've got to leave it there. thanks so much for joining us. >> thank you >> kevin and sorin and of course more on the global outlook on thursday, "squawk on the street," we're going to sit down with the manager of the imf. she has been fierce in her warning against trade tensions and even the psychological impact that they can create, even without going into actual tariffs. so that will be interesting. for sure still ahead, is big blue back? ibm reported its first revenue growth in six years last quarter. are they going to be able to deliver again tonight? plus facebook's face plants. reed hastings throwing shade and a potential billion dollar lawsuit. plus new details on how the company collects data on you, even if you're not using facebook it's the special power rundown ahead. plus biobretech breakout. the ceo on what is driving

growth "power lunch" is back in two minutes. let's begin. yes or no? do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online.

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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. shares of ibm are higher ahead of o its results they come out after the bell big blue returned to revenue growth for the first time in nearly six years will the streak continue and will it be enough to pull big blue out of the doldrums let's bring in number one ibm analyst on the street.

tony, always good to see you what do you think about the revenue forecast and i note in your note that you see it -- you have a $300 million above the consensus number so i think you think they can keep it up >> yes i think ibm can. i think the reported results on the surface will be very good. there's a lot of tail winds, currencies even stronger than we and investors had anticipated at the beginning of the quarter there's likely a favorable accounting change, and they're still enjoying a mainframe cycle, so collectively, all of those things should lead to both reported and constant currency revenue growth this quarter. >> if i'm an owner or a would be owner, give me a playbook for what i ought to be watching for, listening for, in the today's earnings report. >> sure. so, the reported results are likely going to be good, as i mentioned, but i think one needs to get under the covers, because there are a number of tail winds, as i mentioned, for

revenues, which don't necessarily recur, and on the eps side, ibm's likely going to have a very big discrete tax benefit so their tax rate could be minus 20% or minus 25%. i.e., they'll be getting tax money returned to them so the eps and revenue numbers don't matter that much i think what investors and we'll be focused on is, are we seeing an improvement in the march trajectory and are we seeing software revenue growth. those are probably the most important fundamental leading indicators beyond the report >> how do they get tax money back, tony i thought their operating tax rate in 2017 was somewhere around 12% and the tax rate could be higher in 2018. how does that work out to be negative >> so they guided for a 16% normalized tax rate for this year but ibm has ongoing a largely audit disputes with governments and there's a very large one that we believe they settled in

q1 which was favorable for them. so they're effectively getting at least one and we believe two payments from governments around prior tax disputes, which end up being cash payments and offset the tax owed >> wow okay that would be good for them. can we move on to tesla? what do you think of them having to shut down production here again when just last week, he was telling cbs news that everything was going fine when it comes to elon musk. >> yeah, i mean, look, i think the production ramp at tesla has been highly inconsistent, to say the least. for the last six months. and what we observed is, you know, last quarter, in the december quarter, up to a run rate of almost 800 cars per week and at the end of the quarter, they said, look, we think we can improve that from here on in well, in the first quarter, so o t -- the following quarter, they averaged less than 800 cars per week so it didn't improve and on

average it was a little bit lower than what their strength was and i think what this reflects is kind of two steps forward, one to three steps back and throughout last quarter, there were periodic shutdowns of model 3 manufacturing, sometimes they were hours, sometimes they were days. this is more pronounced, the one that's announced today it's rumored to be four or five days but you know, this is clearly not linear progression i would simply make the observation that tesla has been consistently overzealous about what it can produce and we remain concerned that that continues to be the case >> sure. and the timing especially, when just last week he was giving tours of the place tony, good to have you on. thank you. netflix ceo throwing some shade at facebook last night but that isn't the only reason facebook is back in the news there's also a potential billion dollar lawsuit in outrage over new revelations on data collection of non-facebook users. lot to talk about here

so let's bring in julia live from los angeles let's start with that lawsuit. >> a federal judge just announced that facebook must face a federal class action lawsuit alleging that it unlawfully created facial templates for people without their information. there's a law about the biometric information privacy act and this class action lawsuit alleges that facebook has been collecting information. every time that you have a picture on facebook that facebook knows is you and is sort of suggesting you tag yourself in the photo, that's what's at stake here so, the judge said it could amount to billions of dollars in penalties and that it's basically up to $5,000 every time a facial image is recognized without the user's permission so obviously, artificial intelligence is at the center of this it raises a lot of questions about the way facebook interacts with us and gives us suggestions about what we might want to do with our data on the service >> sort of related to this topic, julia, is our second story and that is even if you're

not on facebook, your data is still getting collected. how is that possible >> well, there's a lot of different kinds of information that are being collected now, facebook posted this blog and they announced all the different ways that your information might be collected when you're not using facebook if you shut it down, if it's not on your phone, they can still be getting information from you in a couple of ways. one is those like and share buttons. that could be on a news site or photo site the other is a facebook log-in when you use your facebook log-in to access another app that's all getting -- going through facebook for that. now, there's facebook analytics. websites and apps can use facebook analytics to better understand their own data and then facebook ad and measurement tools. facebook is sort of a partner for different apps to allow them to either deploy ads on their services or understand the way people are interacting with ads. all of those things collect information about what you're doing, even when you're not on facebook but here's the most fascinating part

in this blog post, facebook makes the point that they're not the only ones doing this they name check a number of other countries saying linkedin and pinterest also have like and share buttons. they mention google, amazon, twitter, saying they also do similar things so it was interesting that they were saying, hey, we may be the ones under scrutiny here but we're not the only ones. >> to me, julia, this is just like, i don't know how regulators are going to wrap their arms around any of this. there's so many different issues relating to privacy and data sharing. >> so many different things. >> it's like where do you even begin? >> you know that if you log into an app through facebook, you're electing to do it that way you're electing to use facebook as your filter for that app. you know if you're going to "the new york times" and sharing it on facebook, facebook is going to get that information. so some of this stuff is more obvious than others. but people may not be aware of the fact that a lot of these apps use facebook as a partner to help them run their own businesses >> all right the third story here, julia, netflix ceo reed hastings going after facebook he's a board member, isn't he?

>> he is a facebook board member he made a point of sort of distancing netflix from facebook and he said, look, we don't have an advertising supported business, we're purely subscription based he said they're very happy to not have any of those ad-related issues that facebook has been dealing with so, i wouldn't say it was a dig on facebook at all i would say he was making it very clear that netflix's business is entirely different and not subject to those same pressures that youtube and facebook and perhaps twitter are also facing. >> cambridge analytica, related to facebook, of course, had plans to raise funds through an initial coin offering. >> oh. >> an area of the market that has been so dubious. >> do you know what they're going to use the funds for to build technology to help users reclaim their data from companies. it comes full circle >> the irony is fantastic. >> that's beautiful. >> thanks, julia still ahead, the gop betting that tax cuts will save them in the midterm elections. a new poll out suggestmae s yb

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welcome back to "power lunch. is tax reform what will save the gop in the midterm elections a new poll out suggests, maybe not.

john harwood is live in washington he has the latest. john >> reporter: michelle, it's tax day, and even though that irs website has been down a good portion of the day, republicans are hoping that tax reform, tax cuts, are the issue that is going to preserve their majorities in a very favorable environment for democrats this year president trump put out a tweet saying so many people benefitting from this tax cut. everyone's talking about it. unfortunately, though, the nbc news/"wall street journal" poll just out says they're not saying very nice things on net about the tax bill if you ask, is it a good idea or a bad idea, 27% say it's a good idea, 36% say it's a bad idea. so it's under water. then further, if you describe potential effects, positive and negative, for the tax bill, positive, more jobs, more money in your pocket, stronger economy, negative, higher deficits, more benefits for the wealthy and rich corporations -- wealthy corporations, you see it under water by 39% to 53%.

now, speaker paul ryan, who is the outgoing speaker of the house, but still hoping to -- that republicans keep the majority was on "squawk box" today. he says eventually they will get there into favorable territory for this law >> our ability to communicate specifically with constituents in this digital age is very, very good. so i'm convinced we're going to be able to communicate the benefits of this tax law to people this fall so not only do they right now say they want republicans in charge of the economy, because the economy's growing well, not only do they want to say that the republicans in charge of national security because they're better entrusted to keep us safe, and we have good polls right now, i feel confident we can keep this majority >> now, the most recent evidence we have, however, even if they eventually get there, was in that special election in pennsylvania where democrat connor lamb was able to win a strongly trump district and republicans decided in the end to drop tax cuts from their message in that campaign if you look at the overall preference in our poll for

control of congress this fall, 47% democrats, 40% republicans still a few months for both sides to move those numbers. >> john, we want some clarity on something. we weren't sure. the tax cut impact the polling numbers, 53% of the people are positive about the impact >> no. >> okay. so we had an error in a graphic on the screen so we were all a little bit confused. >> yes 53%, when you were -- when voters or americans are asked, do you think it's likely to be more of a positive because it creates jobs, boosts the economy, gives you more money in your pocket, 39% say, more of a positive when you say, will it be more of a negative because it increases the deficit and gives the disproportionate amount of benefits to the rich and big corporations, 53% say, yes, more of a negative. >> glad i asked. there was a little confusion thank you. >> you bet the president hosts japanese prime minister abe at mar-a-lago trade will be a hot topic there. we're going to head live to florida for the very latest.

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hello, everyone. i'm sue herera here's your cnbc news update authorities say one person is in the hospital in connection with the southwest airlines emergency landing in philadelphia. no word on the passenger's condition. the flight was forced to land after an engine blew on the boeing 737, and then ripped a hole in the plane and blew out a window 143 passengers and 5 crew members were on board. it had taken off from new york's laguardia airport. with the tax day deadline just hours away, the irs website to make payments the down. and there's no word on when it will be fixed. the agency says, though, regardless of the trouble, taxes are due today. adding that the debit/credit

function which has a fee seems to be working just fine. president trump has filed an extension for his 2017 tax return the white house press secretary, sarah sanders, says the president will file his tax return by the october 15th deadline and an installation of red clay poppies finding a new home at southern british royal armory the red poppies, which represent soldiers killed in world war i, were around the tower of london four years ago all of those poppies making up the earlier installation were sold, raising millions of dollars for charity. that is the news update this hour melissa, back to you >> all right, sue, thank you time for a market check now. stocks are off session highs right now. the dow had been up by more than 285 points in the trading session, but right now, up by about 198 points tech consumer discretionary real estate are your winners. financials just turning negative sitting at session lows right now. showing the strength and how

it's being tethered to the flattening yield curve leading the dow today, general electric, as well as ibm oil is also up today oil market closing for the day let's got to cnbc commodity desk >> hey, sarah. well, oil prices a little bit higher here as you mentioned after the settle spending most of the session, however, in the red, lower the oil market still coming off that jump it made last week before the air strikes in syria and then the subsequent declaration that it was an ice isolated incident, we came off a little bit session high today 66.75, tight range. there was a little bit of a pullback, but the charts are still showing support for this trade. many analysts and the technicians say there's still room to run here not far off from that $70 mark with memorial day a little bit over a month away. >> yeah, can't way thank you. >> me neither. all right. >> it will still be 12 degrees out, though. >> feels like it, doesn't it president trump is hosting japanese prime minister shinzo

abe at mar-a-lago today. >> reporter: hi, michelle. it's trade and north korea on the agenda here today between the prime minister and the president of the united states on north korea, officials here are saying that they do expect a summit between president trump and the north korean leader, kim jong-un. they just don't have a location for that summit, and they don't have a specific date for that summit, but this meeting is all about getting the japanese side's input into that and on trade, we had a briefing from larry kudlow just a short while ago and he said that the united states would like to see a bilateral trade agreement with the japanese at some point but on the idea of a reconstituted tpp, a trans-pacific partnership, that the president ordered kudlow last week to look into negotiating with the japanese and other participants in that agreement. kudlow said that's more of a thought than a policy at this point. he said there have been some discussions with the japanese side but ultimately, no concrete proposals have been decided on in terms of tpp at this point.

also, i can tell you that we're going to see the two leaders here within about an hour's time we should see both of them on camera the reporters there will have an opportunity at mar-a-lago to ask some questions of the president, so we'll see if that news cycle brings any more information. but officials here are very reluctant to commit to any specific deliverables from this session today. it's all about trade and north korea, but they're not committing, necessarily, to coming away with any specific agreements by the end of this japanese visit from the prime minister >> got it. we'll be watching for that later. thank you, eamon earlier on sidewalk box, stephen mnuchin discussed the possibility of the u.s. rejoining the trans-pacific partnership or not as well >> the real question is kind of will we make the progress on trade that we want and i'm comfortable that we will we're going on a partner by partner, addressing these issues, and again, this isn't about protectionism. this isn't about, you know, tariffs. this is about making sure that

we have free and fair reciprocal trade. >> let's talk more about today's meeting with jillian she's the managing editor of the financial times and fred kemp is president and ceo of the atlantic council good to have you here. trade and north korea, two huge issues fred, i want to start with north korea, because it's really an existential threat for the japanese we focus so much on kim jong-un might meet with trump, how are we going to involve china, and yet it's japan that has been the closest -- the issue is that north korea's been sending all their missiles toward japan. they literally face an existential threat and abe doesn't want them to be forgotten during this whole discussion >> the first thing to remember is prime minister abe has invested more in the relationship with donald trump than any other world leader, six meetings so far. and not a lot to show for it so far. he's been left on the sidelines on the north korea issue where there have been six party talks right now, it looks like

bilateral talks and then we'll come back to trade but the tariffs were a bit of a humiliation to him in that they didn't exempt japan. but we'll come back to that. on the issue of korea, what they're worried about is that the u.s. would be willing to negotiate the sbintercontinental ballistic missiles that could reach the u.s. but would leave untouched the short-range missiles that the japanese are really worried about what abe wants to hear from president trump is that they will also represent the japanese interests, which is what we didn't hear from new secretary of state mike pompeo in his confirmation hearings. >> jillian, there is a summit within the next two weeks, i believe, between the north and south korean leaders i can imagine that that is causing some agita for mr. abe in part because of reports this morning that those two leaders might just might negotiate a formal end to the state of war

that's existed between those two countries for 60-plus years. >> absolutely. as fred just said, this is a real slap in the face for the japanese because the japanese feel that they have lived with the north korean threat in a very real way for a long time. i used to live in japan myself for many years and there was a constant sense of readiness and fear about what north korea might do in terms of missiles, and japanese friends of mine have been receiving advice from the local government officials in recent months to prepare into bunkers and things like that in case the north koreans actually try to hit them so they feel they've been on the front line and to be ignored or cut out of the discussion is very humiliating. the other issue is that there's very, very strong popular sentiment inside japan that the japanese must demand more information if not the return of the japanese citizens that the north abducted that issue looks like it's been swept to the sidelines and that makes the japanese pretty

unhappy and the key thing to realize is that abe is actually losing popularity inside japan at the moment very fast. >> yeah, he's suffering through a lot of issues in japan, jillian. what about progress on trade this whole issue with the tpp. he went along and created this relationship with all of the other countries besides the united states. now there's talk about whether or not the u.s. will get back in or out at minimum, an exemption when it come to the steel tariffs would be a big win for him >> well, japan was pulled into the tpp under president obama, and abe spent a lot of his political capital selling it to the public so, to have the u.s. pull out has been, again, another big slap in the face i think what both sides want to play for right now is time above all else there's cosmetic things they can do i mean, essentially, the americans, president trump want to seem as if he's trying to cut what is a big trade deficit with japan. the japanese want to make sure that they get some progress on the steel tariffs. they're not that important

economically, but symbolically, it's been very, very painful to see them excluded from the exclusions that the americans extended to others but there are also things the japanese can do, like granting american firms a bit more market access so there is some scope for negotiation, but i think both sides want to play the time. >> what does abe need to walk away with? does he need to walk away with some sort of exemption on the 232 steel and aluminum tariffs or what. >> i've talked to japanese officials a officials about that obviously they'd like to have a signal that the exemption would be okay. these tariffs were on national security grounds so your allies, japan, why do you need them in place. on the issue of tpp, it was really abe who pushed to have this negotiated among the 11 he had a bit of a green light from president trump to go ahead after the u.s. pulled out but i don't think president trump -- in fact, i know president trump was surprised that he brought it together that quickly. abe, as i understand, is coming

to mar-a-lago with a framework of how the u.s. could come back in there are 20 areas of this negotiation that have been suspended, all of which were demands on the u.s. side, so the -- the japanese could make it easy for the u.s. to get back in, but you have 11 countries that are going to ratify this, and they're not going to want to renegotiate the whole thing. there's a chance for side letters on certain things, but watch particularly news on farmers. >> all right >> it's the farmers that are really putting the pressure on president trump right now. >> fred kempe, jillian, thank you. still ahead on the show, we'll reveal the mystery stock up 10% in one month, 140% in a year ceo joins us next. - did you know that clothes dryers are one of

the largest energy drains on your electricity bill? so, hang your clothes out to dry. you'll save money and the environment, and protect your fabric, too. your future is on the line. welcome back to "power lunch. chairs of united health helping the dow, up more than 3% following upbeat earnings. merck and johnson & johnson also on the move. >> for merck, it's a continuation of the good news from yesterday's lung cancer trial which showed that its drug cut patients' risk of dying from the disease in half when given on top of chemotherapy

the news landed the front page of the "new york times" and the financial "times" and their stock got a boost. bristol-mayor is seen as losing ground to merck. the company slightly raised its full year revenue forecast but left its earnings projection for the year where it had been j skpj said it plans to spend $30 billion in the u.s a 15% increase it credits to the u.s. tax law we spoke with the ceo about where j & j plans to invest and he had this to say about biotech valuations >> i think they're a little stretched, to be fair. i think they're a little stretched but depending on the technology and depending on what we can do with the asset in our hands, we'll obviously take a hard look at that and make a decision at the right time >> so you rarely hear a potential buyer talking about

its targets being underpriced but they are saying they're going to be picky. >> stick around. speaking of biotechs here, want to talk about one of the top performing drug companies around lately it rallied strongly today. investors betting on a promising pipeline that includes big advances in the treatment of lung disease and nonopioid painkiller the ceo joins us now in a "power lunch" exclusive great to have you with us. >> thanks for having me on >> part of your company's transformation and part of the reason why the stock is up so sharply is, i think, most people think of you still as the weight loss drug company and that -- you shed that completely belvik is a thing of the past. >> we divested our obligations and really began to focus on the pipeline about a year ago. >> and investors were really excited about the positive phase 2 data that you had for your drug that treats ulcerative colitis. you're going to embark on phase 3. what can you tell us about when those readouts will still come and what we should be expecting from them. >> the normal process is we'll take that data to the fda and

have a good dialogue with the agency and start talking about the plans going forward. >> so that drug is in the same class as ozanimod, which it acquired a few years ago how are you looking at how those drugs compare and and i have some more questions for you about that valuation comparison as well. >> sure. absolutely we -- we've thought about it hard we have a cleaner molecule, top to bottom. when you're looking at efficacy, we've shown stronger efficacy and when you look at safety, we've shown a better safety profile. we believe we've just got a cleaner compound all the way around >> when you look at a deal that they did, and of course they had a setback at the fda recently with the refusal to file letter on that molecule how are you looking at the future do you see a potential deal for that kind of money >> well, we try not to think about m&a. we're focused on building a great company. we've got two great assets

and then again now, we've had two wins in the last year and we're planning to build a company around that. >> some analysts are forecasting that you can get 20% of the patient market right now >> it's hard to tell now we have to get through the phase 3 trials and see what they've had with ozanimod so that will change the competitive landscape over time. we know this market, the combined two markets exceed $30 billion so there's plenty of room to play and again, best in class assets always get a leg up >> well -- go ahead. >> the competitor that you would be facing in the pulmonary arterial hypertension world is johnson & johnson. they made one of the biggest biotech deals we've seen in a while. i understand one of the skrangs your molecule could have is once daily dosing how do you look at that competitive advantage? how much does it matter? >> one of the most important things about that compound is we have a 24-hour half-life

compared to the j & j compound we have about a seven and a half to tenfold improvement in potency and that translated to unprecedented data in a contemporary patient population. we really look forward to bringing that product forward for patients it's a grievous illness. >> you've got another drug in the pipeline, which is designed to treat some of the pains associated with crohn's disease, just to put it extremely simply. a lot of analysts don't even have that in their model how should people think about that it's entering phase two, i believe, somewhere along those lines. >> correct it's in phase two. we expect it at the end of this quarter. so -- >> is it wrong to not include it in the valuation assessment of your company >> just like you've never seen a big pharmacy yell that things are undervalued, we're never properly valued. in this case, it does not get a lot of attention, but it's an exciting compound. it's a nonopioid product it's peripherally restricted

>> so it's not addictive >> that's what we believe at this point and importantly, it could be used in a series of g.i. conditions, so crohn's pain, ibs pain >> it's only one application, there are many potentially in the pipeline >> absolutely. >> are analysts are they under this, undervaluing the potential? >> so much happened in the company in the last year we gave the analysts all they can handle in terms of positive news. >> thank you very joining us >> thank you very much for having me. tyler? >> all right, thank you. twitter up 10%, what's behind the big move atm cks ing nation teatale th next. (siren wailing) (barry murrey) when you have a really traumatic injury, we have a short amount of time to get our patient to the hospital with good results.

we call that the golden hour. evaluating patients remotely is where i think we have a potential to make a difference. (barry murrey) we would save a lot of lives if we could bring the doctor to the patient. verizon is racing to build the first and most powerful 5g network that will enable things like precision robotic surgery from thousands of miles away as we get faster wireless connections, it'll be possible to be able to operate on a patient in a way that was just not possible before. when i move my hand, the robot on the other side will mimic the movement, with almost no delay. who knew a scalpel could work thousands of miles away? ♪

time now for trading nation, and take a look at twitter today, soaring 11%, following an upgrade from morgan stanley. the stock tracking for the best session since early february we bring in the trading nation team for this one. larry mcdonald is with the bear traps report, larry, the note

noted that they were having better conversations with advertisers about accessing twitter. twitter couldn't get out of its own way from what 2014-2016. have times changed >> well, i've been on twitter since 2009, and the one thing i can say is that there's a much better growth path for fwtwitte than for facebook. i mean, 30% of americans according to recent studies are unhappy with the facebook profile around american -- its impact on america, whereas twitter has a much more friendly profile across america as a whole. net-net be very careful here with echnology technology is the largest portion of any sector in the s&p, and bottom line, i would be lightening up on tech and moving towards energy and commodities here >> all right let's find out what the charts say. matt, what do you see? >> well, you know, i kind of agree with larry a little on tech, however, the chart looks quite good on a short term basis, we look at the 50-day moving average

that was key support in 2017, so old support becomes new resistance and bumping around against that level now break above that, that's positive on a longer term basis, the stock breaks out from the tight sideways range for two years now creating a nice base, but late 2017, broke above the trend line back to 2013 and broke above the sideways trend channel there's a nice base and two breakouts to the upside and a lower high we did not fall back into the sideways channel when the stock and group sold off in february got a lot of nice things boding well for the stock, at least on a technical basis. >> certainly, there's optimism there today. guys, leaving it there, though, larry, technology is the best performing sector at least today, and so far this year. for more market insights, go to tradingnation.cnbc.com, and "check please" is next and now, the latest from

tradingnation.cnbc.com and a word from our sponsor. >> a double bottom is a chart pattern suggesting a down trend is ending ready to reverse, sometimes walled a w formation because it looks like a w, and double bottom forms with two distinct lows on a chart around the same level traders view are a bakt the highest high in the formation as a bullish signal ♪

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mar-a-lago, florida, president shinzo abe arriving to meet with trump for many meetings, key issue is trade and also the situation with north korea, and prime minister shinzo abe wants very much to be involved in the discussions to make sure japan is not forgotten as president trump plans to meet at some point with kim jong un, although dates and location are still to be determined. here we see him arriving >> i think trade is going to be a big one for us because japan was not exempt from the steel and aluminum tariffs, which is interesting because they did a lot of the bids for president trump and they went after japan for a trade deficit and treating what he says the u.s. unfairly on trade >> we were waiting to see if they were going to embrace, right? >> it was a warm gentle handshake, though, i thought >> there's the photo op. >> he came to trump tower before he was in the white house, he was one of the first foreign, if

not the first foreign leader to visit trump so i know the point has been made and a lot invested in the relationship. he'll be looking for an ally against china. >> yeah. absolutely all right. thanks for watching "power lunch", and "closing bell" starts right now hi, everybody, welcome to the closing bell, i'm kelly evans at the new york stock exchange >> i'm wilfred frost upbeat earnings, dow up 280 points at the high, traveling 400 points in two days discussing what you need to know approaching the close. >> nasdaq up 1.7% today. we begin with the markets and our reporters following the money. we are at the nasdaq with bertha and bob is on the floor of the exchange >> you take syria out of the