opening bell dow futures indicated up by about 26 points. s&p futures up close to 9. i want to thank mike for being with us today. we'll see your tomorrow. >> see you tomorrow. >> make sure you join us tomorrow, too. right now time for "squawk on the street." ♪ good wednesday morning welcome to "squawk on the street." stocks look to push further into the green for the year as we watch ibm and morgan stanley the president tweeting on tpp. a yield curve continues to impress. we'll get the beige book this afternoon. our road map begins with stocks set to extend gains. the earnings driven rally fuelled by morgan stanley,

united, and csx. trump trade and north korea. the president backing away with tpp. zblu. southwest airlines remains on watch after the deadly fatality the blown gin did show signs of metal metal fatigue. the major indexes in positive t territory for the year dow made triple digits moves in 23 of the last 27 sessions jim, i'm not saying that much anymore but still interesting. >> look, i didn't like last night and this morning's earnings i found many flaws people are excited about csx the fact they have a better efficiency ratio united airlines what did i like about it maybe because they didn't add that many more planes.

is that what we're excited about? lamb research talking about first half bias. there aren't probably too many machines making wafers yeah. >> you have to like morgan stanley. >> i've got against all those, i have a quarter by morgan stanley i think is super so what everyone is so excited about, i'm really not. what i like about morgan stanley it does, once again, you have a bank that doesn't fade should provide some leadership. >> right all though we talked about potential for a fade yesterday and we got it. >> yeah. >> on goldman. you were excited about those earnings they were good earnings. they were strong we heard from lloyd this morning, of course, with the interview with willfred. >> i think no buy back explained today to will by lloyd so much opportunity you don't need to buy back that would be a terrific scenario and a lot of banks, i mean, the thesis everyone is putting

together not a lot loan demand. goldman is a trading situation lloyd said this is how we can do in a not great environment can you imagine what we can do in a great environment that was a bullish kind of postmortem call. i wish they had expressed that a little more on their own call. i liked this kind of here is even a postmortem on the postmortem i liked the interview. >> i would assume you would rather see banks trade higher on loan growth than volatility, which is not a comment on how the economy is doing some might argue it's more of a negative. >> very true i think that what is the narrative people are saying? well, the reason why the ten year is where it is, we don't have a lot of demand if the fed keeps raising rates, we'll have a curve i come back and say wait a second the banks are making a lot of money and they're not making

reckless loans they're making loan growth pretty much in line with the gdp. if the gdp axccelerates, then you'll see more lone grown if we had more loan growth, you know, we would be saying they're back to reckless ways. we got to get out of this business we got to sell these stocks. 12 to 13times earnings, i like the group. and i've got to tell you, not everything is certain. >> it's worth returning on equity 14.99% that's very close to what goldman sachs put out. >> yeah. >> revenues were up 14%. expenses were up but not as much they did show some expense control and positive operating leverage as a result of that, as well what management looked strong. fixed income currency commodities up 9% year over year off a strong prior year quarter.

so overall, again, those numbers good we'll see whether that strong price proves to be able to withstand the trading that occurs beginning at 9:30 and for the day, the call, by the way, began at 8:30 and we'll certainly keep our ears open to see if there's anything said that could change the narrative. >> 11.7 times earnings for a business model that james cornyn built. a business model you can say it's the lowest risk and yet it still gets the same multiple as wells fargo. wells fargo being the benchmark for the first quarter simply because the federal government said i would you the first quarter and you've got it. >> yeah. fee generation in morgan stanley is significant, as well, to your point. >> it's a consistent business. >> yeah. >> what are we supposed to say the consistent business that is coca-cola that grows at 3% because of refranchising or the consistent business that is barred by morgan stanley and

coca-cola has twice the price. i've been back and forth a lot in the banking sectors and they're saying what do we have to do to get to 14. >> ubs took hershey to sell on cocoa prices aluminium is coming off the strongest week since 87. >> mandated by the federal government the second half of the banks, after the review, do you know they traded up dramatically in the second half versus the first half the banks are reluctant to pound their chest and the regulators say, wait a second, they're being too aggressive you can't punish bank of america with a 3% loan growth. against a same multiple as companies that are cutting numbers. actually, it's hershey. >> my question about input costs, airlines, and fuel. hershey and cocoa. coke and aluminium it's classic

is the money going to start to move from equities to commodities in late cycle fashion? >> that's an interesting call because so much of what we're seeing, commodities is somewhat oddity we're going to hear tomorrow ubs started with a neutral i mean, the government is mandated higher steel prices the government is mandated higher aluminium prices. the government mandated minimum wage. >> do you see what the realtors said about lumber and what it's doing to housing prices? that's one reason the nhp numbers come down. >> look, it's not an optimal scenario it's just not. >> before we get to north korea, ibm you spent a good amount of time on it i did not. i'll defer to you on what people don't particularly seem to like, which is more about the gguidane than the quarter reported. i'm seeing various notes from analysts this morning saying

"not quite there." jpmorgan said results mixed to the downside but some progress shown in core areas. we've talked often about it, of course, the key initiatives underway at the company. they sort have of people focussing on it did grow 15% in terms of revenues, i believe, for the last quarter. >> okay. let me give give you alternative facts for ibm. revenue growth at 5.1% that's the highest revenue growth in nearly seven years it beat revenue estimates by $300 million they raised the next quarter's guidance subtly. ibm cloud revenue $4.2 billion that's 22% of their business now. but cfo said that storage was disappointing. he used the word "disappointing" and that's all people heard. one piece of business. yes, it's true i think it's

disappointing because, you know, we're getting a little -- they're being eviscerated by hp and also by emc, which is taking share. but that crushed them. they should never have used that word in my next life, i'll become an adversary of how to give a conference call. i would say if you use the word "disappointing" okay, it better be to some bad meal you had or a bad bottle of wine. >> okay. so advice, don't use that word otherwise. >> yeah. it's like disappointing. that was disappointing it was one little business but it crushed it, mr. kavanaugh. >> people will seize on things and not listen to the context in which they were said. >> not what we would hope for. we thought it would be -- >> i like straight talk. what's wrong with you? you like it, too.

>> how about this. we won the game but the eighth inning was terrible. you should focus on the eighth. >> okay. [ laughter ] >> i'll buy that. >> we won the game, though. >> i'm just giving you why it shouldn't be. >> you won the game but we didn't look good in the eighth inning but we won. >> a weak "w." you're getting it for 12 times earnings good cash flow what was an ugly "w. johnson & johnson. it wasn't so good. they got a big meeting coming up in a couple of months and i think it's going to be a good story. when you're paying so little for these companies, i don't think we should panic. lam research will be down. people expected this flash number to be not that great. but, you know, there's more. they insist in saying the

numbers are biassed in the first half he could have, david, if you want listen to it second half will be disappointing and the stock would be at 107. >> yeah. >> you're not saying great things about earnings season so far. overall. >> the last 24 hours is not what i wanted to see, no. >> we're going to continue to plow through it. more on the way tonight including united rental. >> i'm looking for big numbers i need to see big numbers for these two. >> is it possible you'll be disappointed >> ah, conceivably i'm not going to say it -- >> right. >> meanwhile the president confirming those direct talks between his administration and north korea. this morning he tweets "mike pompeo met with kim jong-un last week meeting went smoothly and a good relationship was formed. details of summit --."

tweeted about tpp despite his earlier statements considering looking at reentering. he said too many contingencies and no way to get out if it doesn't work bilaterals are more efficient. 82 days is how long it's been since he told jim kern it was a possibility. >> it's interesting. he's with japan's prime minister. >> yeah. abe. spent the most amount of time with him abe spent so much time working on his golf game i'm not kidding. to help engender a strong relationship with the president. yet japan not really on board. they wanted to be on when it came to the aluminium and steel tariffs. >> no, they were not exempted. of course, they would like the u.s. to be a part of tpp, but that doesn't seem likely given this latest tweet. >> back tow where we were. they took it away. >> yes. >> took it away and it was good.

>> merkel is coming a week from friday and according to the journal will press the president to exempt german companies from u.s./russia sanctions. try to tamp down the trade fight in the words of one official on the german side, it will not be an easy visit. >> they have a 10% tariff on our cars versus the decision by the chinese to lower their tariff. i think merkel will have a bad time is she a golfer? >> no. not that i'm aware of. >> she better take the game up she better do one of the crash courses. >> it didn't help abe so far he's disappointed in the time spent on the links. >> maybe she'll get a whole in one. [ laughter ] >> like nicklaus' grandson okay when we come back, the latest on starbucks and what howard schultz is saying today we'll update you on the southwest story in the deadly crash as the ntsb looks into what may be engine fatigue futures look modestly okay more "squawk on the street" in a minute

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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. some new details into what may have caused the southwest engine to blow midnight killi

killing -- blow resulting in killing someone. gary kelley called it a somber day. >> the company has a wonderful track record, a very long history and the 737 is a workhorse of the airline industry we're an all 737 operator, and safety is our absolute top priority so this is something that, again, we'll be working with the ntsb to make sure that any -- we understand the root cause and any further actions that we need to take in terms of our maintenance or inspections we'll want to add to the program. at this point, it's premature to say what changes we might need to make, if any. >> all right it does remind us of the incredible safety record that u.s. airlines have had nine years without a death in an accident 100 million u.s.-operated flights carrying several billion

people. >> you know i didn't know about that number until this occurred. i feel terrible about it obviously, what happened is terrible but i think about cars versus planes that's extraordinary what record planes have. it's how well run that industry is in terms of safety. and gary kelly is a terrific guy. this is a terrible thing but it makes me -- it made me feel like that's a pretty good industry in terms of that record. >> yes i think any industry would be happy to have a safety record like this. the railroad industry talks about their safety and they've gotten much better than the old days. but they ought to -- some of these quarters and they do. the airlines they start with the safety record and now i feel like, wow, you know, i ought to pay more close attention to this. >> yeah. i did tweet the atc recording between the pilot and atc she

keeps her cool she talks about -- asked whether the aircraft is on fire. and manages to sign off saying have a good day. just incredible bravery by the pilot in a situation that, obviously, could have been worse. >> i've been in two crash landings in my life. >> crash landings? >> yeah. there were no wheels and the coolness of the pilots the coolness of the stewarts these people were amazing. i was thinking, obviously, the first time i was typing. could you stop typing. it's annoying people it's like we have to come down hard and, you know, these people are much -- they deserve a lot of credit both times i was reassured quickly. one was a faux landing and bounce, bounce, bounce, and the last bounce at the end of the runway the second in mexico but it's one of the airlines.

i don't need to mention it these planes, by the way, boeing has a boeing inside of boeing. i don't know if people know that there's two bowings eings in evy game. >> redundancy is the name of the game along with the training the pilots go there. >> yeah. >> it's second nature. >> yeah. >> expectations for united tonight? >> you know, what i liked about united is they pull back by 7% remember when they had to issue equity every quarter >> yeah. they didn't earn their calls to capital for most of the year since d regular. the last few are a different story. returning capital. >> the stock deserves to be up. >> we'll watch that. as we go to break, we'll show you a live picture of the nasdaq where they're having a moment of silence for former first lady

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time for a mad dash. hump day being a wednesday. where we headed? >> i feel like i've been a debby downer on the earnings there have been some good ones the company is requested, at one point, how is business demand? now we're talking about cessna we're talking about beach craft. the answer is there's some

natural demand in the market and that, i think, is driving positive business. business jets are inflecting now business jets do not need to be bought and they do not need to be made they are one of the most exceptional signs of how confidence is seeping into the business world so i like business jets and i always have. as a tale of how well business is doing i think the inflection from textron is great news. >> a benefit from tax reform >> of confidence business confidence. they didn't highlight -- >> is it a capital expenditure would you buy? >> good point. yes. one thing, david, you know, we like talking about canaries in the coal mine. we hear that this is the first day it's cut out. tell them i want to fly coach!

>> hasn't textron been under pressure to split the business >> they did. mr. far has been saying let's be inquisitive. ge's earnings are coming up. reports friday could be in the hunt stocks, a lot of people are saying is bottom john inch one of the biggest seller was made. >> tom was laid off. >> wow i didn't know that. >> yeah. retired. i don't know what a crime he was one of the best. >> all right we got a lot of earnings to catch up on. we get the opening bell in a few minutes from now stay with us

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i think this is really got to be watched. it's not in a lot of people's numbers. i don't think anyone thought it could happen don't necessarily say that american oil companies are hoping to do better. natural gas is going the exact opposite way because of natural gas. probably flaring more and burni burning more natural gas than we're using. jeez, maybe like 250 next year you have to look at it looking for oil. if you get a mixture of oil and gas you got to sell the stock. and that's pretty important because we're the country with the most in the world. we're pumping more. >> we're exporting and clearly we could be exporting more. >> yeah. >> you don't want to be like

australia. we got too much. >> let's get to the opening bell the s&p at the bottom of the screen at the big board today the t tribeca film festival celebrating its opening night. [ opening bell ] there's a ton of news on retail today. home depot is hiring a thousand people mostly tech jobs. >> i'm so glad you mentioned that home depot has been the most forward of all retailers about big data once explained to me by sales force that home depot managed to rest the contractors from lowe's by using big data. home depot consistently underestimated in terms of knowing their own business gap stores are telling me they're leveraging big data.

but retail has been slow to adopt the technologies that they need to be able to satisfy the customers. home depot has been fast congratulations to them. >> and you have bezos tweeting a picture of him at best buy as they launch a partnership to sell fire tvs. >> yeah, you know, you should be selling roku. >> i know. roku no longer is a part of that but best buy's ability to withstand showrooming, as we used to call it, is a story. and it needs to be recognized, certainly, it would seem, given how long he's been running the company during the period of transformation it's significant leader. he figured things out. >> have you gone for best buy? >> i have. typically i'm not happy with the customer service. >> why >> i don't know. it doesn't work for me. >> have you ever thought it might be the customer?

>> it could be i'm not a particularly friendly customer i want to get the heck out of there as quickly as possible but, in that way, i'm like sell me whatever you want to sell me. it's about me getting out of here. >> river head, jersey city, bedford, oregon. fabulous customer experiences. bought at every single one of them whether it be apple, hewlett-packard, equipment to wire in my house david, let me give you heads up on how you do it you start by saying "how are you" you go that way. >> yeah. >> you should be shocked the results you get. >> i'm going to give that a try. if i ever go in another store. that could be awhile. >> smile that's another one five letters that matter. >> i like that we're doing manners. amazon is coming off the best day of the year if you'll recall, jim, when they did the kohls deal, best buy, kohls popped 5%. so when these things happen, they tend to result in some

short term action. >> yeah. i spent some time at a kohls very new format, kohls, by the way, not more from princeton and, you know, the rap is they're not moving fast enough with their amazon relationship because, of course, one of the biggest frustrations with amazon is you have to box stuff if you want to send it back now you walk to kohls and mail it back to amazon. while you're on the way, you'll buy some -- i bought a nice pair of slacks from kohls recently and eight pairs of gold-toe socks. i got kohls cash back. it was a fantastic experience. >> have you seen the amazon return cubicles there are a couple of people there's one at 30 rock. >> 30 rock >> yeah. >> if you want to return something, you bring it there and they happily take it and deal with it >> i didn't know that. >> yeah. >> if you come to visit when i'm there, we can maybe grab a cup of coffee and you can return

things. >> have you seen the lockers at whole foods? and the prices are going lower by the way, can we say that the president's summary -- may it's north korea. maybe it's the michael koeccome thing. he's not attacked amazon. >> no. >> and it's starting to unnerve the shorts [ laughter ] >> yeah. i guess it might be. speaking of unnerving the shorts netflix is up a little bit today. i mean, the performance of the stock, of course, after what was an incredible quarter that we saw reflected yesterday. it's up 75.5% this year. we like to keep track of relative values. it is only $8 billion behind disney in market value >> the key on the call we're going to continue to lose money as far as the eye can see. that's negative cash flow. and you hear it he's saying, yes! we're going to lose a huge amount of money.

can you imagine bob iger talking about losing money >> it's right. it's the old conundrum for walmart for amazon judged by different measures. >> how about tesla look where the line goes down, the more negative news, the more cars per week. >> what do they lose on every car they make now? like $20,000 >> i don't know, david the fact is, that the more they lose, the more the stock goes higher. >> i'm -- it's funny i don't know if the short interest in tesla has changed, but the interest from shorts that i'm hearing from seems to have intensified. >> i agree with that i'm hearing more and more like this is, you know, the april fool's joke of elon musk here is another example, let's say you're jim hacken. every day you come in. and this guy is talking about losing money and you're thinking i just on a big earnings surprise where does my stock go >> that said, if you have to have access to the capital markets and you have now said, on a tweet, you'll be cash flow

positive the third quarter and don't need access to the capital markets -- >> obviously -- >> thank you. >> obviously. >> thank you i don't know i mean, i can't find anybody that doesn't think they're going to have access the capital markets except mr. musk. have you noted how many senior management have left the company in the last five months. >> david, there is an imperative to spend more time with your family you don't even recognize that with two kids? these people are spending more time with their family i think this is a sign of health and wellness. >> among the senior management of tesla. >> yeah. by the way, you want an outfit that has to be given to the same scrutiny the campbell's soup. the analysts who did the deal have done? both the guys have issued sells. i think this shows me there's a chinese wall it's back and higher than ever. >> that's interesting. >> elon musk he has five kids, i

think. >> really? >> yeah. >> that means he's going to do 5,000 cars a week, right who picks a number like that like a candidate when angela lancebury husband is on the husband and he sighs heinz he goes i think there's 57. >> six children, i'm told. >> 6,000 cars! that's how we got that number. i was trying to figure out where it came from. >> jim, we mentioned the yield curve earlier. 42 basis points. why doesn't the stock market care >> i think -- i'm going to defer to lloyd he said these are unnatural flows. you can't really judge it like you would because of what central banks are doing. if dragy were to let up from buying japan would love it you want to see annual yield curves, tell jay powell to start selling. start selling.

and chinese aren't going to buy. chinese smarting from the sl slapdown. >> they have taken their there shall i are holdings to new heights. >> i got to tell you, we cannot, for a moment overlook what is happening with china versus the united states. >> no, and we should not to your point, the rhetoric and the back and forth continues particularly as it relates to technology the ete move important and nxp still hanging. i mean, they've extended i haven't seen anything extending the merger agreement we know they're refiling but that's going to be blown in the wind for another 60 days, potentially. >> yes. >> and you could argue that given the back and forth, it's not a great environment in which to get a technology deal in t l telcom even if it has nothing to do with the overall state of affairs between the two

countries. >> here is something, again, a cause of concern, i think. morgan stanley in a conference call is now over what will happen there they made that point in the meantime, this is a fang market there's a bit of a bias sales for the first half you're seeing every semiconductor come down on that. saying there's oversupply. >> please, people. but they'll read it through. micron has some flash. >> quick update on time warner the big case going on. don't want people to forget it so much at stake they're getting closer to the end. the government more or less rested its case. they may have a couple of rebuttal witnesses, but what i'm hearing from inside the court, at least, you could see the trial wrap up as soon as early next week. we'll see. still to testify for time warner

is ceo randall stephenson of at&t jeff bewkes to take the stand. thinks government has put on a case that will allow judge leon to rule in its favor it's up to him >> the stock prices, the stock chart said it's a done deal. stock chart goes up. >> just to remind people, there's so much more at stake than this. of course, you know, if comcast, our parent, wants to make another move on fox assets, it would need to have the okay here you've got vertical deals all over the place whether it be aetna, sigma, so these are all things that are in play as a result of this very, very important case. >> yes it's big. >> it's big. >> meanwhile starbucks continues to respond to the controversy

surrounding the arrest of two black men in one of their stores announcing they'll close u.s. stores for the afternoon on may 29th chairman and founder howard shul schultz was on "cbs this morning. >> there's no doubt in my mind the reason they were called because they were african-american and i think i'm embarrassed by that i'm ashamed of that. that's not who starbucks is. that's not who we have been. that's not who we're going to be. >> he also said this is just the beginning the closure of the stores for the day to train management. >> and this is one the stock holds up well. but this is one of those events you would need to have an impact on their business. i don't think it is. you would see the stock down now people looking for 2% in the u.s. i'm more concerned about china they're trying to do everything

right in the face of something very bad that went wrong you might have heard lloyd blankfein. the move to consumer lending willfred frost in chicago where he did the interview nice work this morning. >> good morning. thank you very much. we heard from the chairman and ceo of goldman sachs that he felt the u.s. economy looks, quote "awfully good" that a broad trade war would be harmful. he was optimistic that the u.s. and china would work things out. the topic we were intrigued on succession planning at goldman sacks. he expected david solomon to succeed. >> david is the guy who is left, and i haven't announced anything about my own timing, but i've been doing this job for, you know, quite awhile it's not crazy that people speculate about this. >> what is the biggest factor on timing you need to see more from david or you personally have more you still want to do yourself?

>> i haven't -- i think there's a kind of -- not a question of seeing more but i think there's a culture where you get used to it i like david i've worked with him for a couple of decades. his experience and background -- his job, up to the point where he was coo for a year, never surveyed the entire firm so he ran investment banking and then became coo. there's a lot to the activities overseas, trading. i think it's good for him to be the kind of ceo-in-waiting, if you will. >> the other thing that stood out is how positive he was on their consumer lending business. saying he was super excited about it and saying they haven't moved into the consumer business for the consumer business has moved to them.

guys >> well, i don't know. should they not have bought sofy that was the ultimate. that thing was free for awhile there. why this way >> i think very interesting question, jim. and i wonder whether he thinks years ago he could have moved earlier on this. he made the point they have the nonlegacy issues that some of the traditional banks do carry but on the flip side, of course, they're a bank holding company unlike the tech companies in silicon valley he quote have bought it together >> i thought one of the best moments when you said i want to touch on succession and he said where you going? >> i know. quick whitted. he certainly has a master humor. i was stumped at that point.

thankfully able to dig myself out and recover a little bit. >> what did you think of his answer to the buy back question, i think hurt the stock yesterday. your interview, by the way, the buy back question, i thought it was answered well because the stock is higher. what is your take? >> i agree yesterday i think that was the key factor one factor for earnings beating -- the share price being down people thinking about the sustainability but the other big big factor was the buy back i think they argue that they have the opportunity to grow once again and use capital in that way. i think marty, the cfo on the call yesterday got that point across lloyd did today and stock is up. >> all right, we look forward to hearing from you later on today with scott walker. wilfred frost in chicago today the dow is up 23. >> good morning, guys. up six of the last eight days. you take out china and syria and the market tends to drift up it's the earnings report take a look at sectors

industrials doing well the transports had good numbers. energy is a big market leader. glad gha to see that banks generally positive a few negative ones. tech under pressure because of semiand ibm. take a look at tech. folks, you know it's a long time since ibm has been a big mover in technology. it's 70 points in the dow today. lam good numbers but it's pulling down the semiconductor space overall right now. industrials great numbers. techstrong -- textron a new high new high for csx they had 78 cents a share. united continental was 50 cents. these are ten cents ahead of estimates. breakthrough on energy many new highs today in the energy group and hess, marathon, have a ler row, philips 66 this is the break out group we've been waiting for for a long time. why are we on earnings

52 companies reported so far this is the number of the companies reported earnings up 30%. that's not a ty-- typo. these are beating the numbers. the expectations they were raced before that. this is what i'm saying. focus on the earnings and so far the commentary has been nothing but short of excellent now, yes, we have issues with the banks. i've talk abouted that a little bit here kbe, for example that's an issue overall. jpmorgan is up a little more than 2%. pnc downright now. goldman sachs is down a little bit. wells fargo, this is since they reported on thursday, which is where we want to review the mark from you can see a mixed picture. we reviewed the issues for the banks. i think the most important one is the growth we've been talking

about for awhile there's more competition for deposits they have to raise the money they pay depositors. that was talked about yesterday. that's an issue, as well volatility is down for the trading banks and the yield curve flattening we've been talking about that for awhile. i've been asked about the volume it's peculiarly strangely low. it has been for awhile it's good months good days in february. but generally we've had more risk that's translated into lower volume in the long-term. people have been deleveraging since february that generally means lower volume we had the shift going on for awhile i think the margin that is an impact but i want to point out that nobody splits their stock anymore. if you look at the high-price stocks out there amazon at $1400 now. that's a major issue people can't go out there $1,500 and split those stocks anymore so when you've got those high-price stocks, the dollar volume traded is about the same, but you get lower volume let's get stock splits out there. right now the dow is basically

up 24 points guys, back to you. >> bob, thank you. >> that was great analysis i've been urging the ceos to split. buy two shares and it doesn't have any impact. great analysis by bob. when we come back marissa mayer talks to the times and said it's one of the more tragic cases of yahoo!. take a look at the movement in treasuries this morning as we continue to keep our eye on the curve. as a control enthusiast,

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♪ i'm 85 and i wanna go home ♪ ♪ dropping sick beats, they call me dj nana ♪ ♪ 85 and i wanna go don't get mad. get e*trade, kiddo. former yahoo! ceo marissa mayer reflecting on her time at the internet company one of the more tragic cases of yahoo! is the alibaba stake. both carl icahn's campaign and some of dan loeb's campaign really wanted a commitment to see that stake sold. yahoo! sold half of that in a market cap for alibaba eroding

tens of billions of dollars of upside sometimes that shortsidedness of wanting to get a return quickly can cause you to miss a much bigger gain. >> listen, it's a fair point she makes. no doubt about it. and we talked a great deal, of course, during her tenure, her inability to turn around the core business of yahoo!. she did deliver a lot of value remember altaba. aaba is the symbol it has a $62.5 billion market value. that is largely the alibaba stake. also the stake in yahoo! japan in there and alibaba has a $462 billion market value as opposed to the $35 billion where they sold some >> all right there you go coda >> it's a good point we're ingog to get stop trading with jim in a minute dow is up 29 alerts -- wouldn't you like one from the market

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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. let's get to jim and stop trading. >> great two days for chipotle the new ceo already making an impact watch this stock because it used to be a great one and it could come back. it's been a long time since

something bad happened i don't even want to tell what happened because it's just not fair to them but this could be a rocket if they start getting a little momentum. and jack hartung, the cfo throughout this period, has done a remarkable job the cash is good the balance sheet is great i think it can happen. i think it's a buy >> sands are shifting in qsr what's on "mad" tonight. >> we have a company revance that -- well, they're going to say it's a botox killing and i love cyrusone. it's the data center which remains the strongest area that's nvidia being lumped in with micron. boy is that wrong. and lam research and applied materia materials. >> see you tonight, jim. >> this is the hardest period. >> it's going to get harder. when we come back, a lot more on the southwest airlines engine failure and the corporate response

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i'm carl quintanilla with sara eisen and david faber at post 9. markets in a tight range down 7 points as we watch earnings from ibm, morgan stanley. commodity pressures continue the yield curve continues to compress our road map starts with morgan stanley. a big beat after reporting record profit and revenue for the quarter. we'll do a deep dive into the banks straight ahead plus president trump with shinzo abe spieaking out about tpp. and a southwest flight turning deadly after an engine failure. we'll tell you how the airline is responding. first up, markets are mixed. the dow making some triple-digit moves in 23 of the last 27 sessions and then lloyd blankfein was with us earlier. he discussed the recent volatility that we've seen >> conditions where interest rates of zero, yield curves are flat

no risk premium. where central banks all around the world are buying all the risky assets which then put a damper on volatility and the opportunities to perform that's not a natural state we have not reversed all of that but we're walking that back and walking to it. the first indications of a withdrawal from what's an unnatural state, guess what? the market becomes a bit more volatility people become compensated for the risk they're taking. our clients are doing better and we're doing better with them for more on what lloyd said we're joined by the lloyd portfolio manager at wells fargo. seths carpenter from ubs good morning does lloyd make a point we've been in this drug-induced coma we're coming out of it now and having to once again regain our senses >> my sense is drug-induced coma may be a little strong the economy was in bad shape and it needed a lot of heavy medicine to get things going

we are seeing that coming back now. the federal reserve is normalizing policy so getting things back to normal seeing volatility pick up is normal >> and that's reflecting in everything from rates to commodities and so forth and earnings, too? >> we what we saw before was muted top line growth and companies focused on growing margin hopefully we see top line picking up as well >> any indications so fares too how that's coming together >> we are starting to see that what we're starting to see is companies react differently. they're being a little less cautious focused on capital spend oring n other things >> we're getting this message from the bond market what do we make of the tighter spread between the ten-year and two-year we know what happened first quarter 2008 recession. what message is the bond market giving you >> we don't think the bond market is sending red flags in terms of warning our outlook for the ten-year is

that it's going to get to almost 2.9% at the end of this year and not much higher next year. the front end of the curve will keep marching up as the fed keeps raising short-term interest rates we think that's going to be the normal order of things the long end of the curve is much lower than it has been historically >> investors don't have a positive view of the future? >> to the contrary inflation is low inflation volatility is low. the fed is not likely to let there be much of a breakout of inflation to the up side they'll get to their target a tenth over that. no real risk of a big upswing. >> i am hearing more and more inflation warnings once it happens, it may be hard to get control of. we're not having any sort of spike but there are rising price pressures and i was talking to trading nation of deutsche bank yesterday. the biggest risk to the market is runaway inflation >> i'm curious when the last time is he said that

he's been calling for inflation for quite a while. he's great, but -- >> but we're starting to see some wage growth >> our forecast is inflation should rise. but if it gets up to 2%, 2.1% like the fed thinks it will. that's fine. that's not the kind of thing that destroys the long end of the curve. >> you don't think we're headed for a recession? >> there's a long way to go before reverting i think we've got a ways to go before we get to -- >> do you see it happening or you do not >> we don't see an inversion happening. >> if you are an investor out there and looking at short-term yields or two-year even at 2.4 or wherever we may be and a volatile market, i can see you saying i'm going to sit it out right now and take what i haven't seen in a long time for the two-year >> it's a volatile market. that's actually good for active management for me, i like that. it gives us more opportunity to find areas of the market to invest getting away from the momentum

driven areas of the market so we look for areas that maybe are ignored by the rest of the market, trying to listen for the quiet. >> what's an area that -- >> energy. >> i like energy under represented by the s&p so it's historically low in terms of, you know, representation in the s&p. and so -- and the commodity price has gone up a lot over 10%, almost about 10% year to date and stocks have underperformed the market i think they're in a good position global production has been down. yes, in the u.s., it's gone up, but it's peaked. and so underinvestment globally is going to start to hit global demand has been really strong so we're going to start to hit an imbalance a little bit where demand is strong, inventories are starting to decline and it's going to be problematic. so hopefully we can keep oil

prices in check. doesn't cause any more inflation but healthy. and i think it's good for the stocks the rest of the market is kind of ignoring it >> returning to the levels we saw and not in a good way. does that make risk more difficult right now? >> i think, you know, it's a risky market because valuations are not low. there are areas of the market attractive as an investor, we do our best job to lower the risk profile. i think things can go either way, right you could have a lot of these stimulus go right and the market could go higher which makes it difficult but thing goes wrong where it's a new book. we have not come off stimulus before to the extent we've had it we'll have to see what happens >> so kiernan was asking about the midterm elections. republicans keeping the house or -- >> let me guess what joe's view. >> it's a good question. i'm hearing more and more discussions about the fact the midterm elections could be some

type of turning point for this bull market. >> i think there's an argument to be made on both sides if you think about what the election means for policy coming from washington, d.c., the one policy consideration that hasn't got any tracks so far in this administration is infrastructure there's bipartisan support i remember for years when i was part of the obama administration putting in proposals for infrastruct sbour the president's budget that's something that's possible so i wouldn't necessarily count things out just because the house changes hands. there's actually a possibility for bipartisanship >> we'll find out what can get done before and after the midterms thanks good to see you. speaking of politics, a ton of news to get to. president trump is meeting today with japanese prime minister shinzo abe as the president does make comment on tpp we're also learning about his secret meeting between cia director mike pompeo and north korean leader kim jong-un.

eamon javers joins us. >> the president confirming just within the past couple of hours that the cia director did undertake that secret meeting. the white house initially had not commented on media reports the president onfirming that via a tweet. mike pompeo met with kim jong-un in north korea last week meeting went very smoothly and a good relationship was formed details of summit are being worked out now denuclearization will be a great thing for world but also for north korea. after the president sent that tweet, the white house clarified the pompeo visit occurred not last week but over easter weekend. so the diplomacy behind the scenes here has been under way for some time. not clear exactly when that meeting will take place. they say they're working on about five different locations as possible sites for the

meeting. the early speculation is they'll meet at the dmz because that will be the earsiest location fr everybody to get together. also on trade. tpp. larry kudlow out yesterday saying, in fact, there's not really much going on on the renegotiation of tpp saying it's not really a fully embraced policy at this point some conversations have happened but nothing to report of significance and the other thing on the table, today is a possible tariff exemption for the japanese under the 232 tariffs the white house has been talking about over the past couple of weeks. that's one thing they'll negotiate. the white house not saying what its preferred outcome here is. but shinzo abe clearly would like to emerge from this with a win. we know he's emerging with a golf match he and the president are out playing golf right now back to you. >> last time the president -- president trump won that one, right, even though abe is a good golfer >> and he's been practicing.

>> he wins a lot >> it's true abe has been brushing up on his golf game. >> eamon, quick question on trade. there's a $70 billion trade deaf sit with japan last year this has been a source of frustration for president trump. i'm just wondering he says president xi is a great friend but trashes china on trade. prime minister abe is clearly a good friend but trashes japan on trade. what can we expect, besides potential exemption on steel and aluminum is president trump going to be softer because of this building relationship this is the sixth meeting with abe. >> that's clearly what the japanese side hopes here prime minister abe is the foreign leader the president has met with the most of anybody he's been to mar-a-lago a couple of times he's developing a great personal relationship even at a time when abe is under domestic political pressure back at home in japan a couple domestic politic

scandals unfolding in japan putting pressure on him there. so, clearly, abe wants to come out with this from this session with some kind of a win. some way to put points on the board. the white house has been coy about what the deliverables have been >> he's got to be disappointed that the u.s. no longer looks like it's going to join tpp. that was a big effort by japan eamon, thank you we'll look for updates throughout the day the joint press conference we're expecting from abe later eamon usually is in washington let's go there now where the government's attorneys rested their case yesterday in the lawsuit to block at&t's $85 billion acquisition of time warner as the company's top executives from both of those companies prepare to testify hampton pearson is outside the courthouse hampton? >> david, here we are week five of the trial and we're finally going to hear from the two executives that really have the most at stake in trying to win government approval for that $85 billion merger

jeff bewkes set to take the witness stand within the hour and more than likely, randall stephenson tomorrow. the justice department rests its case late yesterday. at the heart of their presentation if you will, is the claim that if this merger goes through, the estimated 95 million pay tv subscribers may see their bills go up for any kind of video, whether they watch it on the internet, satellite, or cable by something in the neighborhood of $571 million by 2021. that was the result of their economic expert producing a model making those kinds of projections. but the judge who is going to decide this, richard leon, he had some questions about that economic model and, frankly, some of the survey data pulled together to reach that claim

and at the same time, the at&t trial team produced its own economic expert to show how they believe that actually there's the possibility for consumer cost to go down and more choices ahead if this merger goes through. now another linchpin for the government case, witness testimony, e-mails, if you will, and documents to support the government's claim that time warner will leverage its content after the merger in future negotiations with competitors, driving up their cost and eventually those higher costs being passed along to consumers. but again, the judge pointed out some earlier testimony from an nbc universal executive that since the merger, nothing involving the nbc negotiations are done at the behest of trying to protect the cable parent of what kind of the operation

now we're finally going to hear from the two principal executives trying to defend the merger going forward >> -- at least on both sides of presenting their case. going to be some time until we hear from judge leon hamp hampton pearson, thanks a flight turned deadly after an engine fail our a twefts flight we'll get you details and how the airline is responding. and another check on stocks at this hour spilling more into the r dentrerkce pmaet dow is down 60 we're back after this. experience lexus safety system plus standard in the 2018 lexus es and es hybrid. lease the 2018 es 350 for $399/month for 36 months. experience amazing

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welcome back to "squawk on the street." we learning more details about the engine failure that resulted in the death of a passenger on that southwest airlines flight yesterday. phil lebeau joins us with the latest >> ntsb investigators are still taking a look at that engine and looking at everything that might have happened yesterday. here's an update on the investigation. the ntsb suspects that messal fatigue on one of the fan blades in that engine might have played a role or played a huge role in what happened. southwest has decided it will accelerate engine inspectons that program will be accelerated. they expect all the checks to be done over the next 30 days here's what it was like for one passenger inside that southwest flight when the engine exploded yesterday. >> basically, i think all of us thought, this might be it.

we just didn't know. and then all of a sudden, there was a really big commotion about four rows back behind me and then about 30 seconds later, the flight attendant said, is there anybody here that knows cpr? out of my seat belt went and we did cpr on this lady who actually had the suction from the plane, the window broken and the suction, negative pressure had pulled her outside of the plane partially. these two wonderful men, and a passenger, they managed to get her back inside the plane and we laid her down and started cpr. >> scary times inside that southwest flight yesterday take a look at shares of southwest moving higher this morning after trading lower yesterday. also take a look to ge now ge makes the engine in question they do it as part of a joint venture with the french firm

saffarin more than 13,000 of these engines in service we'd not be surprised if we hear more from the ntsb later on today. >> the journal has a piece up about that engine. the cfm-56 and they say on average, a cfm-56 power plane takes off somewhere in the world every two seconds. >> yep yeah, it's the workhorse it is the workhorse. more than 6,700 planes out there with this engine especially because the boeing 737 is the most popular plane out there in terms of that narrow cabin single aisle plane. that's why you have so many of these engines in use >> but i remember yesterday, phil, you were quick to remind us that the circumstances here were pretty rare, right? >> it's rare to have an uncontained engine failure you'll have engine failures, and sometimes you don't even realize it when you're on a particular plane and the pilot brings the plane in, a diversionary landing or sometimes an emergency

landing. uncontained failures where you see pieces of the engine fly out. one of them shattered the window where the victim was sitting that is highly unusual >> phil, thanks. of course, southwest with the earnings result next week. we'll see then if not before starbucks responding after a continuing backlash surrounding the arrest of the two black men at a philadelphia store. the founder and executive chairman addressed that issue this morning on cbs. what he said and how the company continues to respond dow down 44. 80 points being dragged by ibm which is having the rst woday in a couple of years. back in a minute thou hast the patchy beard of a pre-pubescent squire! thy armor was forged by a feeble-fingered peasant woman... your mom! as long as hecklers love to heckle,

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play [music plays]his". when everything's connected, it's simple. easy. awesome. blue origin showing off a new rocket engine in colorado. back from that day with their exclusive interview with the blue origin ceo. we do not hear from this man often. >> this is the first time he's done anything on camera in this capacity as the new ceo of blue origin bob smith is now at the helm of the space start-up blue origin i spoke about the company's new

rocket engine, the amazon effect on blue origin and the outlook for space travel over the next few years. take a listen. >> i think one of the things we need to be able to transition from is a research company to a self-sustaining business we're on that transition you can see that from the investments we're making and where we're going in terms of making those awards with our customers and everything else. so that infrastructure is going to start having some returns in a relatively short period. >> wall street likes to talk about things like the amazon effect your sister company. should we be looking at potential blue origin effect >> i think it's going to follow a lot of the same pathways in terms of building capability that amazon does amazon goes and builds capabilities gains some customer base and continues to build on that we're going to do the same -- that strategy of building capability after capability and making sure that we get customer adoption as we go along.

>> smith also saying he hopes to send tourists up to the edge of space by the end of this year. that will depend on more testing and safety stuff catch much more of my exclusive interview next hour on "squawk alley. >> bezos, branson, musk, battle of the billionaires for space? >> absolutely. >> who is ahead? >> that's where -- this is the big question right now elon musk and spacex but i don't think you should count blue origin out. they've been secretive to this point and now showing blue shep herd at this conference. the fact they expect to have some major contracts announced over the next 6 to 12 months this is a company that folks will be talking more and more about. >> are the pilots that are going to go on some of these missions that push the boundary, are they nasa where are they getting them from >> the new shepherd capsules will be autonomous

so folks paying, space tourists paying and going up will be launched up. and it's all going to be remotely controlled and come back down in about seven minutes. >> that's going to be interesting. >> i'm still thinking about your other interview with wilbur ross about mining for metals on mars. i kind of thought he was kid, but he wasn't. >> i feel when you hear somebody like the commerce secretary talk very seriously about colonizing the moon, asteroid mining, it's time to stop and take a listen n realize just how serious space is becoming and the fact there is this broader policy push that's happening that was really the theme at the space impose num this big broader policy push now that the commercial sector has pushed forward >> now just work out the important rights first come, first serve. >> exactly >> no tariffs on space >> the next trade agreements >> bilateral trade agreement

with mars. don't want any -- just li b bilateral. >> morgan brennan, thanks. mike santoli is looking at major bank etfs following a busy week or so of earnings from many of the big banks >> busy week of earnings obviously slanted to the down side in terms of the market response if you look back since thursday's close, the overall bank sector is down about 1.5%, 2% so you can slice it a bunch of different ways morgan stanley reacting slightly positive, about 1.5% the spdr etf pretty big leg down from the early marge highs and has not recovered in the last several days last three weeks under pressure for a lot of different reasons. this is an equal weighted etf. none of the big banks have an outsized influence the kbw, this is what we more think of as the market cap

weighted bank that has the very largest like jpmorgan, usb, bank of america, citi and wells fargo. comprise about 40% of this etf the issues are all familiar at this point the compressed yield curve something going on when you have the six-month treasury bill yielding 2%, it shows you a lot of the region alg banks are having to compete for deposits that's been another area of pressure the kre, of course, the regional bank etf that shows a similar story as a whole, financials have outperformed the broad market but they've given up that advantage year to date and more recently we'll have to see how that goes. >> mike santoli, thank you over to sue herera with our news update at this hour >> good morning, david good morning, everyone here's what's happening at this hour as investigators look into what

caused a southwest airlines engine to explode, the pilot tammie joe shults is getting hailed as a hero a former naval pilot and being praised for nerves of steel. authorities say she prevented a far worse tragedy. one passenger unfortunately was killed president trump confirming that cia director mike pompeo met with north korean leader kim jong-un last week. the senior white house official clarifying that meeting took place over the easter weekend. pompeo is trump's nominee for secretary of state the president tweeted the meeting between pompeo and kim went very smoothly and a good relationship was formed. mourners are gathering at the george h.w. bush library at texas a&m's campus to pay their respects to barbara bush she died yesterday at the age of 92 and washington, d.c.'s mayor is looking to allow 16-year-olds

to vote for president. he is supporting a measure that would lower the current voting age by two years for both federal and local elections. if it is approved, the nation's capital would become the first municipality to allow minors to cast their ballots for president. we'll be watching that one for you. that's the news update this hour over to jackie deangelis for the eia report >> the eia reporting a drop in crude oil inventories of 1.1 million barrels. a drop in gasoline that's a bullish report. you can see the markets were anticipating that. crude prices crossing the $68 mark crossing it again. trading at $68.28 at the moment. that's a new session high. obviously, we've been watching these prices spike crude up about 9% in the last month. geopolitical issues have been an issue ahead of the air strikes in syria that was an isolated incident. the market is looking at how

geopolitical relations will man fef fest with russia you can see we are on the rise dollar intex down a little bit that's supportive as well. commodities across the board are having a strong day, guys. >> jackie, really quickly. does this translate into magic numbers for gasoline >> summer driving season we typically see this kind of action, these bullish reports as we're leading into it. take the crude oil turn it into gasoline. get ready to use it as drivers hit the road those prices are probably going to be on the rise. the peak of that season is july 4th. >> oil above 68, as she said when we come back, starbucks continues to face backlash after the two black men were arrested at a story in philadelphia how the company is responding and what howard schultz had to say about the incident today eew down 19 but s&p still in the grn.we're back in a moment

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welcome back to squawk on the street i'm carl quintanilla with sara eisen and david faber. the markets trying to hold on to some gains the dow being dragged more by ibm to the tune of about 80 points ibm has its worst day since october 2014 >> also watching starbucks call it a mea culpa. company leadership addressing the public uproar surrounding the arrest two of black men at a philadelphia location last week. chairman and founder of starbucks telling cbs this morning he's ashamed, embarrassed and the company will fix it >> i think what occurred was reprehensible at every single level. i think i take it very personally as everyone in our company does and we're committed to making it right the announcement we made yesterday about closing our

stores, 8,000 stores closed, to do significant training with our people is just the beginning of what we will do to transform the way we do business and educate our people >> joining us to discuss, senior associate dean for leadership studies jeff sonnenfield i don't know if ironic is the right word but howard schultz tried to tackle this issue a few years ago by putting race together on cups there was a total backlash he was trying to avoid racial issues and then this happens at a starbucks. what do you make of the multipronged response from the highest level we've seen at this company. >> i think it's fantastic. you framed the question right. there's a certain irony that at starbucks, but before dealing with that irony, it's important to celebrate that what howard schultz, but especially what ceo kevin johnson has done here, has been remarkable.

it's the anti-mark zuckerberg, anti sheryl sandberg this is different than richard smith of equifax or looking at tony hayward of bp these folks who hid. they didn't engage of course oscar munoz of united. they apologized. they went to the victims personally their instincts weren't to right away defend the misconduct of employees as munoz did of united he never apologized to the victims, by the way. when he eventually apologized it was to other passengers. the instincts were to go to the victims. but there's a schadenfreude. you hear from financial cynics who say they held a high bar in putting all these simplistic cliches on coffee cups for baristas to become overnight experts. but what the company stands for,

they've endorsed that. that's remarkable and a great model going forward. >> i think it just highlights how it is totally hard to manage you have a company with more than 28,000 stores around the world. hundreds of thousands of employees, yes, they can train them on racial bias. yes, they can come out and get out in front of this issue but isn't it so hard to control this sort of thing in this day and age with social media and everything else? >> it's hard for any global enterprise any far-flung enterprise we have lots of employees. and how to, in this case, if you account their franchisees, some 30,000 operations. even just half of that is their own owned and operated it's hard to be responsible for all that but they are that's the brand they manage that's the public trust they manage and they're aware of it situations where howard schultz, for example, exactly ten years

ago, shut down the operations. it was roughly 6,000 stores then he shut down it cost him around $6 million. this one i estimate to be around $12 million. it's well worth it when you look at the lawsuits at denny's huge multiple of that for racial discrimination in not serving customers properly, including some of president bill clinton's own -- and a federal judge secret service they wouldn't serve at denny's they paid some $60 million for that but the reputation damage was awful. schoney's had a problem with not hiring employees one of the co-founders said in court if you don't start firing some of them, i will and he proceeded to do so. that was some $100 million lawsuit and he joined the board of the naacp so the restaurants going all the way back to the 1960 woolworth's failure to serve blacks in the south, it -- these restaurants

are public space they are the town square they have an elevated significance for racial harmony. and i thought something that's remarkable that howard schultz let kevin johnson manage this instead of undermining it. >> yeah, there's the communication part of it, jeff, as we all know next comes the implementation, the operational implementation of any new policies. any new hiring or firing that needs to happen. that's going to be harder to judge. >> yes, it's not just pronouncements that's a really great point. by shutting down the stores and bringing in the training, it shows they're trying to operationalize this through execution and not just setting a high-minded esg type milestones that they don't follow through on we still have some issues with blackrock as the owner of the majority owner of the controlling owner of the largest ak-47s and ar-15 automatic rifles out there

that's a problem with the high standards they set. here at least at starbucks, they're living their brand and realize they're not into racial categorization that way. schultz says that isn't who we were, isn't who we are and isn't who we will be that's a great statement in the midst of this succession, this is the thing a younger howard schultz would have probably been tempted to come in and undermine his successor. he did that with, of course, with a fantastic guy who came in a couple years ago that turned things around. jim donald but then howard wanted to bring them back to their roots and took jim donald out and undermined him same thing with oren smith who passed away a month ago. howard is really giving the successor a chance to breathe and live the job as he said he would. good for howard for following through in his own execution of his announced goals. >> jeff, i was hoping to turn you to nike because there is more news that we can confirm

the journal is reporting three more executives have left this company, including head of diversity, a manager in basketball and a vp in digital marketing. this comes a month after the president, the number two at nike had to leave as well as his lieutenant they're going through some cultural investigations, looking into this bro culture and host of hr complaints but the exodus continues what happens inside a company when this is going on. >> this is sort of really a shame. and there is a bit of a succession root to this. the former ceo of sc johnson was brought in to take over after phil knight, the founder, stepped down a bit early because of a tragic death in his family. perez did everything right corrected the ship on the job one year. developed the women's line and instead of seeing china for sourcing he also saw china as a great market for michael jordan and air jordans.

and phil knight got a second win, came in and undermined him. gosh, who is really in charge in this place and there are still some lingering succession issues there and there's a problem with the leadership culture that hadn't been properly institutionalized. nike is a tremendous company and they seemed like they were getting a bit of a new lease on life themselves. this is very discouraging. you take a look at under armour which is a tremendous company. going through some learning pains. and i think they found themselves again but nike looked like they were becoming part of -- >> actually the bro culture you're saying goes back all the way. it's interesting because under armour has also seen an executive exodus for different reasons. the company has been under pressure jeff, we have to leave it there. >> we see this in retail and in media. certain personality infused industries we think we should be on heightened alert to watch out for it >> good point. jeff, always good to talk to you and get your insights and the

historical perspective as we head to break, starting tomorrow, we're live at the imf meetings in washington managing director christine lagarde will be joining us and former treasury secretary jack lew. a lot to discuss taxes, trade is that at risk? checking on stocks dow is negative, down 13, dragged down by ibm. a 0.25% gain now

what deutsche bank is calling the mother of all risks to the market. find out on "trading nation. more "squawk on the street" right after this

nobody's putting their money into equities. they're not investing in commodities or fixed income. what people areally putting their money into is what they hope to get out of life. but helping them get there requires a real refusal to settle for average. because when you approach investing with a tireless desire to beat the status quo, something wonderful can happen. those people might just get what they wanted out of life. or maybe even more. the market is not doing a lot directionally but there are some big movers. james gourman said results were strong across all businesses and in all regions we've been watching the banks to see if they can hold early gains. morgan stanley is.

ibm also reported a beat on the top of the bottom line but shares are under pressure after the company issued that lower than expected full-year profit forecast analysts say the legacy hardware business continues to hurt growth and profit margins. we've said a couple of times this morning that it's the worst day since october 20th of 2014 erasing about 80 points off the dow by itself. >> similar patterns we've seen of recent days morgan stanley is still up but it was up about 2.5% at one point. certainly shaving those gains given what at least all the analyst reports i've read at this point and heard was a very strong quarter really across the board. hardly anything to take issue with at the company. goldman sachs had what many thought was a strong quarter until comments about the buyback that may have disturbed people we'll keep an eye on the financials >> the financial weakness in the stocks has been interesting. it's happening at the same time energy is making this big move

higher crude is spiking as jackie reported back to 2014 highs on oil. energy at the top of the list on the s&p 500. really resuming this leadership role over the last month or so as oil has broken out. we got that bullish report with the drawdowns and all the geopolitical tensions driving up the price. >> cocoa, two-year high. lumber, all-time high. >> you have to wonder when these riding commodity prices start to impact the global economic impact it's increases prices for consumers. we've been in a period of weakness for years >> now to jon fortt for a look at what's coming up on "squawk alley. >> wisconsin governor scott walker is going to join us ghts of questions about how it mit affect the economy and growth that's coming up on "squawk alley. ♪

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ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. welcome back to "squawk on the street." i'm dominic chu. the energy sector has been strong all morning long on the back of those higher oil prices. u.s. crude prices hit a fresh three-year high after private sector and government data showed drops in government inventories. every stock in the s&p 500 energy sector in positive territory.

we're leading gains here, seeing them in newfield exploration and apache and hess. the spider energy on pace for its seventh up day of the last eight. back to you guys carl >> all right thank you very much. restaurant reservation app resy making a name catering the hard to reserve restaurants the open table competitor launching new products including a program which allows restaurants to use the app's data to predict customer behavior joining us co-founder and ceo ben leaventhal with us. >> nice to be here. >> what kind of behavior do they want to predict? >> restaurants are trying to maximize covers, the number of people coming into the restaurant we use everything from weather to no-shows to the length of the meal to get restaurants better at knowing who is coming when and how much extra inventory do they have they can fill with other people. >> they could potentially communicate directly to them or announce a special of some sort at a certain time of the week. >> exactly thekds see the book is light on

a monday night and do things to get more people through the door and they could see that the book is jam packed on saturday and make sure they're closing it so they can deliver good hospitality. >> are they paying you for these services is that how you make money >> resy is a company that they pay us a monthly fee to use our product. >> what is that? >> $3.99 a month and goes up to $8.99 a month depending on which fierce you're using. >> we use the phrase hard to reserve restaurants which sounds like a limited sample. >> we work with any great restaurant and restaurants all over the world now in the last year we've grown revenue more than 200%, grown our restaurant base more than 200% as well and there's a lot of great restaurants still out there, many, many thousands, so -- >> that have resisted the app, sort of trend or not >> it's software and mission critical software. it does take restaurants time to

turn it over that's the work we're doing now. >> what constitutes a great restaurant >> any place that makes you feel good when you're there. >> how do you determine what's your population of great restaurants? >> yeah. i started eater back in 2005, so i'm a restaurant guy i have a lot of passion for restaurants. we look at reviews that come in from our users and we look at data, we look at things like really how many covers are they doing. we really think that the mark of a great restaurant is the number of repeat customers so we look at how many customers are coming back as an indication that that's a great restaurant as well >> you had an investment from airbnb. >> yes. >> what's that partnership like? >> well airbnb's view is in addition to accommodations to put a trip together wholistly you need something like restaurants and we've partnered with them to figure out what it looks like to have restaurants integrated into the airbnb platform. >> we continue to see survey data that suggests teens, grownups, are putting more share of wallet into food over say

clothes. do you see that changing or peaking any time soon? >> i think restaurants is a blue chip category. i think people are going to figure out different ways of spending their money at restaurants. obviously delivery is coming on very strong and now outside of new york, obviously we've had delivery here for a long time, merchandise products, you know, companies that are shipping across the country from a restaurant in new york, is a new revenue stream for restaurants i think the future is quite bright and restaurants need to continually evolve their thinking on what their model looks like. >> carl mentioned open table that was -- >> never heard of them >> first entrant into this space, it has to be a hard competitor they have a lot more restaurants on-line and a lot more reach even yelp is in on this business how do you compete >> we lead with technology and hospitality. something we've done differently is looked at the industry and said we want to be partners with you guys you're restaurants, you know the business the best. we're technology people and we

can build great technology and if we can work together we can move the industry forward. what's happened in the decade before resy nothing changed. there was a decade there was no innovation, nothing changing in the technology so what we said is, let's move the industry forward and let's do that in partnership. >> ben, thanks >> thanks for having me. >> with resy when we come back blue origin showing off its new rocket engine "squawk alley" starts in a moment

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it's 11:00 a.m. at ibm headquarters in new york, 11:00 a.m. on wall street and "squawk alley" is live ♪ ♪ yes so crazy right now most incredibly your girl b ♪ ♪ ready ♪ ♪ history in the making part two ♪ ♪ so crazy ♪ >> good wednesday morning. welcome to