"squawk box" begins right now. ♪ >> live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and mike santoli. let's look at the u.s. equity futures. you will see at this hour it looks like there are modest declines dow futures down by 30 points. s&p off by 1.5 nasdaq down by 17. this comes after a day where the dow was down by 83 points. s&p was off by a half percentage point. the nasdaq was off by three quarters of a percent. not massive losses, but they were -- the biggest losses we've seen for the s&p 500 and the nasdaq we are still on track at this

point to end higher for the week as you saw yields picking up yesterday. this caused some concern we'll look at where those treasury yields are in a moment. look at what happened overnight in asia with stock prices down across the board nikkei was off by 0.1% the hang seng was down by close to 1%. the shanghai was off by 1.5% then you see what's happening in europe this morning with some of the early trading. at this hour it looks like there's some advances. the dax is barely positive it's up, though. the cac is up by 0.37%. thre and yields spooked some people, as yields go up, it makes people question where to put their money. the two-year treasury hit a 9 1/2-year high yesterday at

2.44%. hovering just below that this morning. the ten-year, we hit a four-week high of 2.93%. right now at 2.91. we will be watching apple and then a lot of the chip stocks that supply apple yesterday apple shares fell nearly 3% after taiwan semi warned about iphone demand. the warning quickly gained steam into a full blown chip wreck there were some analysts calls, and then we saw names like nvidia, texas instruments, all in correction or in bear market territory, down 10% or more from their highs. we'll talk about this more later in the show. barclay's ceo jes staley is under fire british regulators fining staley for trying to unmask a whistle-blower back in 2016.

but staley will keep his job u.s. federal regulators could also fine wells fargo up to $1 billion for financial misbehavior in its auto insurance and home mortgage units. the exact penalty will be announced later today. shares of wells fargo, you can see, down a half percent or so more high level departures at nike. analyst sam poser put out a note yesterday disclosing three more nike executives have left the company recently cnbc confirmed the moves with a nike spokesperson. that brings the number of top level departures to nine over the past 35 days the latest include the chief marketing officer of converse, the senior director of enterprise data management and the director of global consumer knowledge. sources tell cnbc one of the executives left for a competitor nike says these departures are not related to workplace conduct issues the exodus began in march when

trevor edwards resigned, that came as ceo mark parker sent out an e-mail announcing an investigation into complaints of inappropriate behavior the following days saw the departure of the head of diversity and vps in digital brand marketing, basketball and footwear susquehanna says all of these departures would be more disruptive than expected and most of these executives played key roles in nike's strategy its lowing its price target from $62 to $59 >> we don't have a vp of footwear here at cnbc. >> no, you said you were interested >> i'm interested in being the inaugural person >> your shoes suck somebody take a shot of joe's shoes. >> no, it's a dow component. >> you see what sorkin wears he wears those ra didiculous dr

sneakers >> those are duck shoes. >> these are cole hahn's they were in style -- >> a few years ago >> in the '80s >> i can't say anything. i'm wearing boots. >> i don't like laces. >> comfortable you get used to things >> i can't reach my feet nichl >> we all get comfortable. i understand that. >> can you touch your toes >> i can >> you can't stand up and touch your oes >> doesn't nike own cole hahn? >> yeah. they were nike air soles a lot of people wear these dress sneakers david boyce does it. they look so bad he should be sued when sorkin walks around he has the thing here. he has everything, these thin ties then these sneakers on i don't know changing tastes. >> yeah. all right.

another executive exit to report mattel's ceo is stepping down. she's expected to take the top job at ancestry.com. the stock is down about 47% since she took the job february 8, 2017. mattel naming the former head of maker studios as its new ceo that change will become effective on thursday. >> your point, santoli, j & j does not have a vp of footwear >> yeah. >> so "squawk box" doesn't need one? >> might not be the next priority does walmart >> probably. >> in charge of purchasing shoes. >> eamon is here eamon, they got -- i have an intro but i want to do my own. you're a guy -- >> you always do, joe. >> you're a guy who is subjected to the firehose, trying to drink from the firehose nature of the

news sigh qucycle. >> i will tell you five things you might talk about today did you see the market come back 100 points yesterday after rosenstein supposedly told trump last week that he wasn't a target in the cohen raid >> right >> no one has seen what is there yet, have they couldn't he be a target tomorrow >> absolutely. >> there's a legal distinction between being a target and a subject of the investigation >> but i think the target -- >> target is a much more serious and formal status. >> i think the markets took solace from that i don't know if i was the president if i would think i'm out of the woods because of that >> right >> then i heard people saying -- >> you remember the white house -- >> there were so many people in the room that heard rosenstein say that, if he does become a target, that might be problematic. then you had the yus thnews tha

comey memos came out, and rudy giuliani has been hired because they want to wrap this up quickly. they keep saying it will be wrapped up quickly i don't know whether mueller thinks they're wrapping it up in a week then one other big story the mccabe -- the ig report. do prosecutors -- they have a different bar than the ig, don't they then comey says mccabe is lying. mccabe says comey is lying that gets ugly where do you want to start >> a lot is going on it gives you a sense that the pace on this is quickening it's a firehose of news and a lot is happening now which gives you the sense that we're reaching a higher state of frenzy on this, if you can imagine that the comey memos are the mem yoos

that comey wrote last year because he was concerned about interactions with the president. a lot of this was known, leaked, reported in the papers a lot of it was in his testimony last year and in his book out last week. a couple of new nuggets of information here in the memos. this is just his account he says that he told officials at the white house on the steele dossier that much of it was consistent with and corroborative of other intelligence he also said that the president told comey that the hookers thing is nonsense, but that vladimir putin, the russian leader, had told the president we have some of the most beautiful hookers in the world comey also said he had a conversation with then white house chief of staff reince priebus about mike flynn, the national security adviser at the white house at the time. priebus asked coma if they had a secret intelligence warrant for

mike flynn comey said i paused for a moment and said i would answer here but it had to be asked and answered through blushed channels the president seized on all of this and put out this tweet, james comey memos just out, showed clearly no collusion and no obstruction also he leaked classified information. wow. will the witch hunt continue there's a lot to digest there. the president suggesting that comey leaked classified information. when you ask white house officials what specific classified information are they accusing comey of leaking? they can't really back up that talking point and point to anything classified now in the public domain as a result of james comey's alleged leaking. the president seizing on this and saying this backs up what i have been saying all along

>> other stuff in there that he said like when comey said -- we don't know about you, trump said i want you to find out whether any of my satellites -- anyone around me when he said satellite, whether anyone obstructed with russia and then i hope you would see fit to investigate this matter when he said matter, now it sounds like he was talking about the hooker, the pee pee tape cnn says that over and over again. 73 times over three days >> did you count >> they didn't mention syria yet over there i'm kidding, they may have but he was talking about that. the other thing is when putin also was saying that that never happened, he said that about the hookers again in public. he didn't say that's supposedly there. like when he was saying no, there's nothing to the dossier, at that point he threw that in

it's crazy i think he made that point, if it were to be true, they would have been great hookers is kind of -- which is bizarre that we're talking about this >> it's a bizarre way to defend yourself by hsaying how great te hookers were that you didn't have any contact with in a country that has great hookers they're offering explanations for why he wouldn't have been there, that he didn't stay overnight. there's been some reporting that he may have stayed overnight he would have never done such a thing. why would i need a hooker? so the president touchy and defensive on that subject, as you can imagine anybody who had been falsely accused or accurately accused about it would be >> right you wouldn't take coinkindly -- other thing. we have to move on but there was one other thing

that struck me >> there's a lot to talk about >> you'll be back. >> a lot going on. >> you will. >> that's right. >> you will be back. all right. there will be blood. thank you, eamon javers. >> see you, guys as much as i hate to do it, we'll change the subject and get back to the markets. investors watching earnings and bonds, all of this happening amid rising rate concerns. joining us is edward campbell from qma and kathy jones from charles schwab kat kathy, let's start off by talking about rates yesterday. 2-year at a 9-year high and the 10-year pushing 3% is this for real >> it looks like it. the culmination of the beige book was strong this week. philadelphia fed index showed a lot of price pressures in the pipeline, some tightness in labor markets. and so it leaves the fed with very little choice probably but

to go ahead and continue on the rate hike path then we have the big surge in commodity prices to add to it. most of this the result of trade disputes, the sanctions, but nonetheless, the price pressures are there. >> all in all, rates are rising for the right reasons, right strong economy >> yeah. i would say the surge in commodity prices is not demand driving it it's other factors so the sanctions on russia, on the trade disputes are behind it i wouldn't say those are the right reasons, but definitely the economy is on firm footing >> we have talked in the past often about how interest rates act as gravity on stock prices as they get higher, they get heavier and weigh stock prices down we saw that in microcosm yesterday. how do you think we should be looking at this? is this a situation where rates are getting high enough that you would say it's time to diversify a bit? maybe get out of stocks? >> i don't think interest rates are a big concern for stocks and

stock returns or stock valuations in fact, our research shows that rising rates are only bad for stocks if you're going from an environment where rates are at normal levels going to high levels, but if you're going for a period where rates have been at ultra low levels going back to normal levels, that's good for stock returns, and it's good for valuations you are moving away from an economy that's sick to one that is stronger. >> but i wouldn't light my hair on fire about interest rates going higher, particularly for the right reasons, but wi have been lo -- we have been looking at long period of time where we were spurred on by saying there's nowhere else to put your money there were so incredibly low rates that investors were looking at stocks because you had to find somewhere to get return if we were talking about a return to some sort of normalcy,

i would think that would have to weigh in on how you value stocks at some point. >> valuations have actually gotten better, right, while rates have been in this six-week or so trading range. so we had an 18 1/2 pe ratio on the s&p 500 as we ended the year, now down to 16.3 the big story this year is earnings are booming you get a 20% rise in earnings, you get stocks responding more to political, geopolitical and policy risks associated with the fed. stocks are looking good here to me even in an environment where rates go above 3%. >> kathy, i sort of half jokingly talked this week about one day the big concern we were talking about was the flatnesses of the treasury yield curve. short-term yields going up longer -- longer term yields not

going up and then people going they're getting unanchored if you can be worried about those two things we must be in an okay zone where nothing is that radically out of whack. >> i would point out the short end of the yield curve is steep from three months to two years that's a very important part for the financial sector and for the economy. you have the long end flattening out. >> from 10 to 30 >> yeah. that's flattening out. so i'm not overly concerned about it if we get towards inversion we start to worry about it we have seen a bit of a slowdown on bank lending. i don't think that's related to the flattening of the yield curve. that short end is still steep. >> we are still actively in the middle of earnings season. we will hear from general electric and honeywell today what do you think about some different sectors we have heard from so far or the ones we're

about to hear from >> we had disappointments yesterday, but overall it's shaping up to be a fantastic earnings season. and that's sort of the key thing. we had a couple of bad months here in terms of down months for the s&p 500. february and march i think the earnings season has been driving things higher in april. and we think we have more upside here as we get into the summer, you know, that's becoming more of a difficult period seasonally for stocks we are ha we have a lot of things the market needs to digest here with the fed. over the summer you will see stocks in the volatile trading range where it's going to be difficult for stocks to make headway, but that we ultimately get back on track towards the end of the year. this is a year where stocks

outperform bonds by a significant amount so we're thinking high single digit, near 10% return for the s&p 500 this year. >> ed, kathy, thank you both for coming in. coming up, we will go to the chairs for the water cooler stories including a $35 billion mistake at deutsche bank i did say "b," billion with a "b." later, general electric takes center stage the earnings reaction squad, which includes mike santoli, standing by, we may bring in the task force and the rapid response team. i think there's a s.w.a.t. unit available as well. that's at 6:30 we'll bring you the numbers and the company's turnaround plan. play "do it like this".

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than the entire market capitalization for the bank. some landed in the account at the clearinghouse. the error was spotted and was quickly reversed >> is that true? the entire market cap of deutsche bank -- >> the market cap, yes not the whole balance sheet. >> our banks are -- if you're a decent bank here, jpmorgan is 300 billion. >> yeah. the equity value of deutsche bank -- >> a regional bank is worth more than 35 billion. >> many of them. >> so deutsche bank, they have bigger banks in germany? >> no. >> the public equity value has been knocked down. >> former governor chris christie's official portrait will cost new jersey taxpayers

$85,000. that's more than the cost of the portraits of his three predecessors no jokes no jokes no jokes he's a good man. australian artist paul newton was commissioned to paint the portrait i see both of you what you're thinking >> what are you talking about? >> nothing >> your mind jumps to a lot of places doesn't mean we follow >> no jokes. >> what does that do for the trade deficit for an australian artist f we send the money to him. some relief for the wall street bull. the iconic sf iic statue will nr have to face down the fearless girl her statue will be moved to a location near the stock exchange stat street global advisers owns the statue it's supposed to call attention to try to increase the number of women on corporate boards. the statue is moving because it created a safety hazard.

the city said the number of pedestrians spilling over into the street around the statue was dangerous. >> yesterday i saw a tweet, there was a lot of snow, it said even in the snow the little statue girl doesn't back down from the bull. and james woods, it was his birthday the other day, he tweeted it's period a period metal period statue period >> you read too many things. you get annoyed. >> i do get annoyed. >> yet you still keep reading. >> right general electric hoping to engineer a turnaround. they're expected to report in the next few minutes we'll bring you numbers and instant reaction on wall street. and a live report from saudi arabia where opec members and other major oil producers have

gathered to talk about the future of their production agreement. we'll tell you how it could impact the price of oil at home. yesterday oil up above $69 today it's back down to $6 . as we head to break, a look at yesterday's s&p 500 winners and losers experience the 2018 lexus nx and the nx hybrid with a class leading 31mpg combined estimate. lease the 2018 nx 300 and nx 300 all wheel drive for these terms. experience amazing at your lexus dealer.

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♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square >> good morning, everybody welcome back to "squawk box" on cnbc, we're watching the u.s. equity picture up this hour. after a down day yesterday for the markets, you'll see there are red arrows continuing this morning. we're not talking about major declines dow futures indicated down by 43 points s&p off by 3 the nasdaq down by 23. we have been watching all these things as we continue to watch treasury yields. there was a pick up in yields across the board the two-year hit the highest level in 9 1/2 years the 10-year is trading above 2.9% it was even higher yesterday 2.93%. right now trading at 2.92%

we're watching this closely. as we get additional economic news that might give us a hint of what's to come. >> all right so we're ready you're ready for this? it's out now it's out dow component general electric reporting. we have noted that at least people have said that we've had a couple of kitchen sink quarters already maybe we're ready to start showing progress it looks like that's the case. all these numbers have come down so much that these are good beats here 16 cents adjusted on a non-gaap basis, that was 5 cents above where the street was at this point. the company is -- they're saying reaffirming 2016 guidance. >> that's been lowered already once >> either affirming or reaffirming it $1.07, 6 billion to 7 billion

dollars worth of industrial free cash flow. a lot of other metrics here. flannery says the first quarter is a step forward in executing on our 2018 plan we are seeing signs of progress. morgan brennan is here with us mike santoli has a lot to add, too. morgan, what else? >> it looks like a reserve charge of 1$1.5 billion related to the wmc investigation, the doj investigation into the subprime mortgages that's been under way for the last couple of years reaffirming 2018 guidance, $1 to 1.07 eps, industrial free cash flow 6 billion to 7 billion. coming into the report, analysts have been dropping their numbers for 2018 earnings, so consensus is 95 cents. the fact they reaffirmed it is

positive it looks like flannery is also saying power is making progress on services execution but that the industry continues to be challenging and is trending softer than forecast that's something to watch. power is a big business for them and under pain forlt last c the couple of quarters >> people were not expecting that to do better soon though we have $70 oil, that should help. >> baker hughes, majority owned by ge, is also reporting this morning. speaking to a couple different traders yesterday who think the move we've seen higher in the past week or so in ge shares is more or less tied to crude prices >> we may not see some of those results in the earnings that they're putting out now, but the anticipation is in the current quarter that's ow. >> when you look at ge, it's all about what the outlook is and how this sort of turnaround

process is going even more than the top and bottom line numbers we're getting today. >> almost a third of the way through the year, if they can stand by the previous guidance of $1 to 1.07, that's above where the street was already whatever the skeptics were braced for did not come from these numbers. >> no more kitchen sinks >> this is better. >> margins are up. some of this stuff you would want to see is there also the baker hughes piece, if we're in the game of doing sum of the parts valuation for ge, that just helps. >> higher interest rates mean lessening of the pension woes theoretically. >> but they have a lot of debt >> a lot of srt debt thhort-tert that's gone up in price. >> one other thing to point out here, cost reductions have been a focus. industrial structural costs were

reduced by 805 million and on track to exceed the reduction goal of 2 billion in 2018. we're seeing those numbers come in better than expected as well. >> good initial reaction from the stock. up 3.5 now seemed to find a bottom in the 12s. a year ago people would have been what? found a bottom at 12 and change. >> the key here, based on the last couple of earnings reports we got is the call, which starts at 8:30 a.m. eastern you'll recall we saw a similar report in terms of better than what were low and tempered expectations in the last quarter, then we got on the call and we heard about s.e.c. investigations, some other details that sent the stock tumbling >> so the dividend is good now, huh? >> no news is good news.

>> 3.5%. >> dividend yield. >> and is it good? can you count on it? >> at this point, based on free cash flow guidance, it would seem like their expectation is that they maintain it. >> all right thank you to morgan brennan and mike santoli >> thanks. >> you're welcome. coming up -- wait a second all right. maybe -- it says here we'll get a closer look at those numbers we have an analyst we have an analyst at the top of the hour generic analyst. crude prices trading at the highest level since 2014 we'll talk oil and hot spots around the globe with dan yergin he is at that table with trump a lot of times and at 8:00, our special guest will be former commerce secretary, carlos gutierrez.

he will talk tariffs and the trump economy. stay tuned you're watchin"sawbo og quk x"n cnbc

. welcome back to "squawk box. stocks to watch, shares of shire are down in europe today allergan said they do not intend to make an offer to buy the company. there were rumors that it might. yesterday shire rejected a $63 billion bid from takeda pharmaceuticals. activist investor jana partners has taken a more than 9% stake in pinnacle foods in a filing jana says it will seek talks on a range of issues including a possible sale of the package foodsmaker pinnacle's brands include vlasic pickles and duncan heinz qualcomm has confirmed they will cut more than 4% of their work force starting in june. the layoffs include about 1,200 employees in san diego where the chipmaker is headquartered

tile ftime for the executive edge the sohn conference kicks off on monday today we'll look at when-year performance of last year's picks of the conference sometimes you see quick moves on these stocks, but what happens over the course of the year? >> it's amazing as you reflect on the picks of last year. the sohn conference does, as you mentioned, begin on monday in new york some of the brightest minds in the hedge fund world will convene to present their invest ible ideas we looked at how some of last year's picks panned out. if you heeded the advice of larry robbins you would be in the green on those investments he said dxc technologies, fmc corp and iqvia holdings have

outperformed another pick that would have made you money, short frontier communications josh resnick urged investors to make a bearish bet on the telecom provider that stock is down 60% since as always, not all picks were profitable brad gerstner touted a long in united airlines, after after some pr scandals that stock has fallen 7%. and david einhorn, his stock gain gained >> if you bought the day off, would you still see some of those gains? >> i put myself in the mind wof the average investor who is

watching the sohn conference, you would do it right after. if you're an average person watching these moves -- >> you can't get the instant tick on it >> i trust those investors i want to invest how they invested this is what would have done. wunts again this year, cnbc is partnering with the sohn conference foundation. we will be live from the conference on monday, april 23rd that's coming up it's here in new york. it brings together some of wall street's brightest investors to present their best moneymaking ideas. leslie, you will be covering it? >> i will, indeed. coming up, companies are increasingly relying on automation to perform jobs that would have been done by humans we'll look at trends in the energy sector and those jobs first a quick check of european

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welcome back some stocks to watch, shares of e-trade are lower toda

despite the online broker reporting better than expected first quarter results. e-trade added nearly 96,000 new accounts in the quarter. the daily avenrage revenue trade hit a new level. skechers beat forecasts, but the shares are down today. the foot wear maker reported weak second quarter outlook. the shares are down sharply, down by over 23% right now we'll continue to keep an eye on that that's a decline of $10. then there's ericsson which is on track for the best day since 2008 the swedish mobile phone equipmentmaker reported first quarte earnings and margins that beat estimates as cost savings from job cuts and restructurings that kicked in as well. china's zte is sounding off on the u.s. government the tech firm calling new u.s. sanctions on the company unfair and says that they could

endang endanger -- they could endanger survival th the government says the chinese company broke a settlement agreement. zte is a manufacturer of mobile devices and telecom systems. kpmg has a new survey focusing on how energy executives are evaluating emerging technologies and the impact on the work force joining us now is regina mayer, global sector head of energy and natural resources. trying to think, i would think that the energy industry is sort of been automated for a while. what are humans still doing in the energy sector? which ones are replaceable in this new world >> good morning.

thank you for having me. i think the key lesson from the survey is humans are to the replaceable but there are a number of tasks that are very routine and open to automation you're absolutely right. the though the industry has been at the forefront of automating, those drilling rigs and refineries are highly automated sophisticated pieces of technology now we're finding artificial intelligence, the robots, block chain, iot, machine learning really improving a lot of routine, accounting transactions, the more mundane administrative tasks the industry is committed to not replacing the human beings, but adding more value to what they do. >> how many humans are, at least for now, are needed to support, you know, the ai, or the

automated systems, or the robots or whatever it is. i've still got my fingers crossed that it's at least one to one, and maybe two or three to one, some people say that, will there be humans needed to at least monitor and keep things going, you know, keep the machines running effectively >> absolutely. the goal is to try to take more of the humans out of harm's way. i had the opportunity to go to norway and visit some of the activities of digitization in the north sea, a risky place to do business. if you can make things more automated and protect the environment and move human beings on shore into control rooms and control centers, that's a win-win the other piece of the survey that was helpful is that 84% of respondents said they plan to increase or maintain head count. the goal is to try to grow the business, you'll see production increases across the board, with

less head count growth, and more automation to supplement what the humans are already doing. >> in terms of margins, it's not a slam dunk that the energy companies will do better then because they could have the same or a greater workforce where is the payoff, defining more stuff or doing it more efficiently? we can't necessarily say it's accruing right to the bottom line then. >> that's true but you do see margin improvements across the board because they're getting better, faster, cheaper, better optimizing the use of all the equipment that goes with it, as well as the people that support it it's a very strong industry with a lot of entrepreneurialism. most of my clients are trying to be a profitable in a sub-$30 per barrel environment you can scale, more acreage,

myrrh drilling, more production, with fewer heads and the technology is a lot cheaper in today's world. the bots and artificial intelligence, the price points for those have come way down to even offset some of the offshore people intensive work that got moved into other parts of the world. >> can you plug in some -- >> to be replaced with bots. >> can you plug in geological info and the ai will tell you, yeah, there's a big oil find down there can't do that yet, can you >> not yet that's the goal. base level reservoir engineering tasks, as an example, would be done by artificial intelligence and your reservoir engineers start working on the harder geologic questions folks are talking about the easy rocks are the first rocks, and then after that it gets really quite hard to deal with the geology to make a cost effective production run that's where artificial intelligence and the machine learning will really come into play to enhance what the humans have already been doing.

>> cleaner and safer and everything else. well, sounds all good. >> that's absolutely the goal. >> it's a brave new world. looking forward to it. >> it is. >> thanks. >> thank you. >> you're welcome. the ceos of america's biggest steel producer says the clock is ticking on tariffs. here's newcor's ceo. >> we must not let the day of may 1st slip any further his credibility and the credibility of america is on the line here. we expect him to do what he has promised to do, we expect him to honor the date of may 1st and install either tariffs or quotas to those countries that haven't been able to negotiate a separate agreement on that date. >> even without the tariffs, newcor saw strong results this quarter. it's running at 92% capacity to

meet demands all the prices have risen without the tariffs. >> you don't know how many people were trying to get ahead of it. it's helping in the short-term. >> when we come back, general electric out with quarterly results. we will dig through numbers with an analyst and talk about the future of the company. an industry that relies on aluminum to bring its products to market, beer. we're going to talk trade and tariffs with the president and ceo of the beer institute. "squawk box" will be right back. i'm not a bigwig.

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earnings from general electric, honnee -- a rundown on results and what you can expect at the open is straight ahead. tariffs and global market disruption, how end users are dealing with pricing pressure, the ceo of the beer institute talks about the can crush and how it could put a dent in profits. and it's 4/20 day. >> hey, man, am i driving okay >> but california is seeing sales go up in smoke that story and more as the second hour of "squawk box" begins right now ♪ >> announcer: live from the

beating heart of business, new york, this is "squawk box. good morning, everybody, welcome back to "squawk box" here on cnbc we are live from the nasdaq markets on times square. we've been watching the u.s. equity futures at this hour. at this point it looks like things have turned around, at least for the s&p 500 and the dow. no major moves futures are up 2.5 nasdaq down 2.5. a week when all three of the major averages are on track to end higher let's get earnings reports we've been hearing this morning, some out from dow component general electric, where a quarterly profit of 16 cents a share beat expectations by 5 cents and the company maintained its full year forecast more on ge in a few moments. the street has been optimistic

stocks have been up 5% through the morning, a lot of people thinking okay, no more bad news to get weighed in. maybe we can see what's happening with the company. cleveland fed president said the fed should keep raising rates this year. she says the fed can always speed up or slow down its pace of rate increases depending on economic data, or other issues that may develop. and wells fargo is said to be close to a settlement of up to a billion dollars related to risk management practices, according to multiple reports. the settlement could be announced as soon as today stock right now up by about 6 cents. >> the ceo of barkley will keep his job after british regulators concluded attempts to unmask a whistle blower that didn't represent a lack of integrity, but instead chose to slap the executive with a fine.

last year the bank flagged to regulators staley's attempts to reveal a whistle blower. how big is barkleys, santoli >> marketwise, i'm glad i'm with a solid u.s. bank with capital behind it. >> barclays looks around 6 billion. >> go with citigroup what are they? >> even with the problems, back to 180 how about the industry leader, j.p. morgan, 381 billion. >> yeah. >> you have a little economic problems, you've got 381 billion. it doesn't disappear, like 35 billion. deutsche bank -- they do derivative -- you feel comfortable with that. >> it was more, $5 billion more.

>> trying to bring back the facts. >> okay, don't do that. >> some more high-level departures at nike analyst sam administratimoser c three more left. dprtur d departures are up to nine. the director of global consumer knowledge. sources tell cnbc one of the executives left for a competitor nike says these departures are not related to any workplace conduct issues the high level exodus began in march when nike president trevor edwards resigned an investigation was announced into complaints of behavior. head of diversity and v.p.s in

digital brand marketing, basketball and footwear. these departures could be more disruptive than expected as a result, sthe target price i lowering by 62 another executive exit to report matell's ceo is stepping down. she is expected to take the top job at ancestry.com. that's a switch, isn't it? she had a rough tenure at mattel stocks down about 47% since she took the job on february 8, 2017 mattel naming the former head of maker studios. change effective on thursday. giuliani is joining trump,

thought to be a top candidate for a cabinet position he will now be advising the president on the russia election interference probe being carried out by special counsel robert mueller. president trump parted ways in recent weeks with another prominent attorney and the need for legal advice has only grown after the justice department raided the home and offices of long-time trump attorney michael cohen, giuliani made his name as the u.s. attorney for the southern district of new york before becoming mayor. he will now take a leading role in carrying out negotiations with the mueller team. giuliani knows mueller well also having worked with him when mueller was the head of the fbi, and giuliani was here in new york city. >> nearly a third of the way through the year in three markets -- or three months since the market peak. the major indexes are flat year to date, volatility has fallen off recently, and earnings are strong investors have been hard to impress the last couple months mike has more. i'm introing you, mike.

>> i'm here. >> you're here, talking about you. >> i actually wrote that so that you could intro. >> that's weird. and you're on the ge squad, and able to do this too. >> going to try. >> all right. >> to set the scenes -- >> you must be exhausted go ahead, yeah. >> mostly the wake-up call market has actually had a nice little rebound from the lows from april 2nd until wednesday's close, market was up 5%. if you look at the chart of the s&p 500, that puts room where we are and the recent lows. you see it, it popped up to 2,700 level, the close the other day. pull back a half percent yesterday, not that notable. but i do think a lot of people are looking at those two lines as what the market has to improve to achieve to put a close on this period, or they backslide. we're in a neutral zone where the market has more to prove before the bulls get the benefit

of the doubt four ways to look at a report card on where the market sits right now, valuation improved because the earnings are going up and stock prices have been stymied for a while. sentiment is subdued, not outright bearish, but well off the giddy highs of january that's constructive, too supportive of the idea people are not too aggressive' moment leadership, types of stocks leaving the market, still okay cyclicals doing better than defensive stocks that's what you want to see. dents in tech leadership, but overall it looks like it's relatively intact, and you see materials and energy doing well too. it's a risk on tape overall even if banks have not been able to really take off. momentum has been lacking, unimpressive two steps forward, one step back and vice versa for a while that's where we sit going into the weekend. if we go through this entire earning season and the s&p can't make progress, then you have to

start to ask if anything else is going on. >> this is as good as it gets? >> close to that in terms of year over year change in earnings. >> checked out crude, and can't really tell whether this has had any effect, but president trump just tweeted, it has to do with an upcoming guest we're talking about, as i said president trump just tweeted, looks like opec is at it again with record amounts of oil all over the place, including the fully loaded ships at sea, oil prices are artificially capitalized, very high, no good, and will not be accepted, and we're going to talk with dan yergen in a second about this, and with the voracity of some of the reports coming out of saudi arabia that they're targeting. some people are not sure those are necessarily the saudi -- >> you would think they'd like 80 to 100. >> acceptable, go gang busters

over here. that was why they were supposedly not doing things before. >> need a happy medium >> we'll see. >> they've been leaving opec's supply -- leading opec's supply restraint the last year or two saudi arabia has definitely tried to be more disciplined. taking a look at broader markets, joining us joe zeitl and brian leavitt. joe, you've been bullish, and you've seen the -- is it april oh, it's 4/20, dude, it's 4/20, man, yeah, you look -- we've got some reese's peanut butter cups. how about a twinkie. >> been to colorado recently >> exactly. >> it's april now. we've had february, march -- two and a half months now of sideways and volatility, is it a pause that refreshes, higher

year end target on the s&p >> i think it's positive refreshers, higher target. >> what is it? >> 3,000 for the s&p the way we get there is earnings we're at the start of earnings season, sets up for the s&p earnings to hit 160 this year which basically puts the market trading somewhere between 16 and 17 times earnings. which i think is a pretty reasonable valuation that's point number one. point two is earnings growth around the world is solid. if you look at the morgan stanley country world index, measure of global equities, their earnings are up 20% year over year. here in the u.s. the two big drivers are the weak dollar and higher oil prices. and oil is something that will be in focus, i'm sure, but when you look at oil prices they're up 30% year over year, gas prices up 12% year over year the cyclicals, energy, materials, industrials, overall, that lead earnings higher in the

u.s., and overall i think it's a pro-risk environment. >> are you as bullish as joe, brian? >> i am. >> you are >> this volatility came after a long period where volatility was nonexistent. what happened was the global economy was doing so well, synchronized expansion you started to get towards peak leading indicators and you started to surprise on the downside of some economic indicators that's what happens. there's very little to suggest this is the end of the cycle growth around the world looks strong, valuations are still reasonable, monetary policy in most places are accommodative. we'll know what the end of the cycle looks like, we'll have higher inflation in the u.s., we'll have a strong dollar, we'll have credit spreads blowing out. none of that is prevalent right now. >> what do you see in the economic data that causes you to

say that it's surprising to the downside, no significant acceleration. >> if you look at the citigroup's index, it's hooking down it's not as if we're seeing numbers blowing up and look extraordinarily disappointing. it's just that we had gotten a little bit ahead of ourselves. we had peak pmis, everything that looked -- that was going gang buster. so our expectations got too high the surprise came down some. >> you think it reaccelerates in the -- or accelerates in the -- >> yeah, the second half, there's a lot of stimulus coming the second half of the year. we will see an acceleration of growth, earnings will be supported. investors focusing on tweets, tariffs or trade wars or what's going on with north korea or syria are missing the larger picture. there are things that are disconcerting on the margin, but these types of regional events or this type of rhetoric over trade war, that's not what will

bring down the cycle. >> joe, you think this is the -- we're 291, 292, this is the beginning of a 3.25 to 3.5% tenure >> i think it will make a run. >> that's okay >> for equities, that's okay next 12 months, end of this year to 12 months from now we could see the tenure treasure startin with 3.25 to 3.5 if you think about it in june of 2016, the tenure treasury hit an all-time low of 1.35, 1.37%, and that, i think, will mark the end of the bond bull market, 34 year end market in bonds ended june of 2016. the tenure treasury backed up to 2.9% what's interesting if you look at investor flows from that period, investors from june of 2016 until last week pulled $170

billion out of u.s. equities, yet the s&p is up 30%. the bloomberg bond index is flat over that weird -- period. offsetting inflation, ask going to fixed income, and data suggests they're going with longer maturities. that's a march of 2,000 type moment to big investors. >> your 3,000 is calendar or 12 month? >> year end calendar. >> you said you were bullish as joe, i bet you don't have a 3,000 -- you don't have a 3,000 price target do you have a s&p price target >> we'll be above 2,900. >> price is right, don't want to go over. >> more important is getting the market right the names in the -- the emerging

markets are going to continue to do very well investors have needed to be in technology and emerging markets, we add some other cyclicals to that and investors will look back on 2018 as a volatile but good year in markets. >> did bernstein replace you yet, joe you were tough to replace, i think, weren't you >> thank you. >> come on now and we all listen a little close, i'm not putting down rich bernstein, now you're at blackstone, and head of something now. carries a lot more weight. >> bernstein has a lot of money too. >> bernstein gave you a chance, and "squawk box" bagave you a chance now your career is soaring we're lucky to have you. brian, i don't know what to say about you. general electric reporting a

short time ago, brian langenberg on the phone with us now, reporting on the numbers and getting a feel for what he thinks about these brian, i talked with you a few moments ago, you said with ge there are so many moving parts, whether they beat or miss, they did beat by 5 cents, better than expected what's your overall talk >> good morning, becky it works like this, i'm not a new school parent, i'm an old school parent, the kid doesn't get to set the standard for behavior so 16 cents, isn't that cute when i go back and look through the historical numbers this is what the first quarter looked like for '13, '14, and '15 before everything blew up. whether it's 16 cents or 14 cents, even if we know we could trust all the accounting i'm not impressed, number one. that 5 cent early morning rise -- 5% early morning rise, i

expect some of that is going to go away. second of all, you don't look at the first quarter anyway what you need to look at here is "a," what's going on with the major businesses the power business is supposed to be a major driver the profitability dropped by almost 40% capital has been chopped down a lot, reported another loss until you get power fixed and they're nowhere close to getting that fixed, the stock only goes so far i think the bigger issue is how much can they -- they're not going to sell assets it's not the time to sell assets, except for smaller stuff, but there's a lot of pressure on them to find ways to realize value on some of the larger business units. and that's what i think will be more important over the next few months. >> although, brian, a lot of what you just said are things the street has known for quite a while, that things are bad, that

we're not talking about anywhere near the results we thought we were going to see. you're right on the power pint an issue the company itself points out they're seeing issues with power. challenging, softer than they're forecast but again, maybe what the street's reacting to is the idea there's not more bad news that was unanticipated that got thrown out this time. >> you know what, you raise a good point, becky, but i would say it's hope, not proven. it's going to be a while to really prove it out. the numbers are something you have to -- even though it's been known for a while there are problems, when you had the big writeoff around capital and assets and insurance assets they sold ten years ago, that was a game changer above and beyond, or lower, lower, that drove the stock as well as it's been can it recover over time yes. but not something highlighted as a beat.

>> brian, you mentioned this looks like the first quarter of prior years. the real question right now for investors, have we finally gotten the stock to be essentially washed out if the dividend is safe, if the cash flows are at least moving in the right direction, you don't necessarily have to be that precise whether it's a dollar in earnings this year, somewhere near a trough? >> i agree i'm not sure what else is left to blow up if anything, the oil and gas business right now is obviously very weak, and that's positioned to do better if you look at average inventory levels for global oil you have this kind of big mountain in 2014, 2015 as price collapsed. the saudis turned the spigot to the left trying to drive u.s. fracturing up. you're getting close to inflection point on oil that i think the oil prices being where

they are, if not higher, is potentially sustainable. if that turns around for oil and gas, that would be significant. >> brian, thanks a lot for your time, we appreciate it. >> of course when we come back, we've got some stocks to watch ahead of the opening bell and then later the surge in aluminum can costs leaving beermakers at a disadvantage when it comes to pricing we will speak with the ceo of the beer institute about reencet tariffs and what is being called the can crush. u e tcuned yoarwahing "squawk box" on cnbc play "do it like this".

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i want to know how long is that -- is it filled for years does that open every couple -- >> looking for your next gig. >> the ceo of the beer institute, huh >> does the institute open you want a fellowship or something. >> homer should definitely apply, get out of nuclear power. weaker than expected guidance for the current quarter. when we come back, are aluminum tariffs disrupting global supply chain for beermakers we're talking to the ceo of the beer institute. dan yergin of ihs, market vice chair there he will join us for a preview. "squawk box" will be right back. . >> announcer: time for today's atasc trivia question. wh w nokia's first product

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>> did not know that coming up the world's largest oil producers meeting in saudi arabia this morning, dan yergin of ihs market joins us to discuss production, russia and more and yes, we're spelling that right. as we head to break, tak

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♪ good morning, everybody, welcome back to "squawk box. it's friday, so we're playing joe's favorite songs, just to get him into the mood. >> how did we come up with that? >> you're so easy. we find something that drives you crazy. we have to do it again and again. >> not just me, all right. >> so many ways to get him among the stories front and center this morning, earnings out, honeywell, the companies earning $5 a share, better than

expected raising its forecast, and stock is up 2.5% shares of takeda slumping, investors showing concern about its ongoing -- after shire, continuing to engage in talks. yesterday drugmaker -- a rebound for pop later in junk bonds is in evidence. new data, junk bond funds had their largest weekly cash flow in over 16 months. the funds took in $3 billion during the seven days ending wednesday. is that an overstatement to think there's a big rise in these things hard to say yet? >> hard to say if it's really real. >> we'll continue to watch. >> aluminum prices surging on uncertainty in the global supply chain after the tariff

prices have hit the highest levels since 2011, among the industries at risk for disruption, beer, which you can imagine, joining us now -- >> mm, beer. >> exactly maybe the guy with the greatest job, one of the greatest jobs in the world, jim mcgreevy, the ceo of the beer institute. did you major in that, jim is there a major, do you have an mba in beer or anything like that >> well, joe, if you work hard and get a few breaks, you might one day just get a job like mine. >> i already asked -- how long -- when -- is there a certain amount of time they've got to let this be open for other people you can't be ceo for life, can you? >> you know, while i'm ceo, you have an open invitation to the bar in our office, which is around the corner from this studio. >> you have a bar in your office >> next time you come to d.c., come and sample all the great products from our member

companies. the beer institute's been around since 1862, we're one of the oldest trade associations in the united states, and we've been representing iconic companies and iconic brands for years. we've seen government interventions in many different ways in beer over the last 150 plus years unfortunately the tariffs are just another example of that. >> a pretty big one, though. and you can exhale conneactualle dots pretty easily from what you're seeing. let's talk about that, the aluminum tariffs, what was the -- once they were put in, how did it affect the industry just go through the -- everything that happened rusell is a big producer. >> that's right. your colleague said on cnbc, tariffs are taxes, and taxes are job killers and prosperity killers. we have seen -- we estimated that the tax on beer would be about $350 million from these

tariffs. unfortunately, we are seeing the effects even just one month into the implementation of the tariffs. we've seen the price of primary aluminum go from $2,000 a ton in the weeks before the tariffs were implemented to today at $2,500 a ton so there are great effects to downstream users 60% of the beer manufactured in the united states is sold in aluminum cans and aluminum bottles. so this is a big part of our business and these tariffs are definitely affecting our business. >> will that mean lower margins for the brewers, or will it mean higher prices or consumers, or both >> i don't think we know what it means yet. this is definitely a cost to brewers. i've spoken to a number of our members, and others in beer, brewers who are thinking about

innovation, brewers who are thinking about improving their physical plant, their brewing equipment, hiring more people, all of that is sort of put on hold as we understand what's happening with -- what's happening with these tariffs there are two components to the price of aluminum for beer brewers. the first is the price -- the base price set daily by the london metals exchange the second component is called the midwest premium. the midwest premium is essentially a shipping and handling fee that allows aluminum producers to get their metal to north america we have seen that skyrocket in the last year, just as on the news of the investigation starting, and now on the implementation of the tariff we have seen that skyrocket. and we're very concerned particularly about this midwest premium. it's set by one company in secret with input from aluminum producers and aluminum traders who have a financial interest in seeing a very high midwest premium. unfortunately we see that the

tariffs have exacerbated the price irregularities of the midwest premium in particular. >> so, jim, you've heard of the not in my backyard with nuclear waste, things like that, it's the same way when you try to address trade and equities around the world whoever gets affected, they don't like it, obviously, and we've heard the president say, you know what, take one for the team or, you know, farmers are going to get hurt, but we're going to try to offset that somewhere else but, i mean, is there any way to address some of the unfair trade practices of other countries when whatever industry that you pick, there's going to be people that are hurt. you're a trade industry -- you have to represent your beer guys we're going to take one for the team because the greater good is maybe that we address some of

these inequities in global trade? >> there's two answers to that the first is, we are taking one for the team we think this tax is $350 million tax on beer brewers at a time when there are more than 5,000 breweries in the united states innovation and dynamism all levels of beer, big, medium and small, so this tax is definitely having an impact the question is whether the rewards that come from the tax for other industries will come to pass. we heard aluminum smelting producers say that they were going to reopen some plants. those things take a long time. we are facing job impacts today. so who knows what will happen for the aluminum smelting industry, whether it will come back in the way that the president hopes. the other thing is, we are dealing with the tariff in however we can deal with it

today. but i think that the department of commerce, the department of justice, someone in the administration should take a look at this midwest premium there have been price irregularities in this particular component of the aluminum price for years that have affected beer brewers cht i think one thing the administration could do is take a serious look at how this price is set, and do an investigation into that. i think that would really help your brewers. >> all right you ever visit new jersey? do you get a good table when you call up? we had a governor mcgreevy. >> i'm born and raised in new jersey, i went to high school in summit. >> i live next door to summit. >> exactly. >> that's awesome. i knew it wasn't him, although i have asked him when he was governor, i asked him for my own easy pass lane and he didn't give me that. >> my family refers to him as the other jim mcgreevy. >> the other jim mcgreevy.

there was a joe kern that was governor of indiana or something. thanks, we appreciate it as i said, you do god's work. >> come by for a beer, joe. >> i love beer i do accept it doesn't love me as much as it used to. coming up, saudi minister, despite wiping out all of the surplus, the market curve should continue that's next. later, it's 4/20 day, got done talking about beer. you can -- now we're going to talk about weed, reefer, hush, mary jane, it all refers to marijuana. what do they call joints now >> a blunt. >> might as well ask me a sports question. >> same difference you can't escape it these days we're going to talk about marijuana, after state legalizes medical and/or recreational use

of -- one state that was seeing its sales go up in smoke straight aadhe "squawk box" will be right back.

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welcome back, everybody, key oil talks with opec and russia are slated for this week, and this weekend coming up in saudi arabia for more of what is at stake if all of this, we'll bring in jan yergin let's talk this through. oil prices have been riding high, as mike was just pointing out, trump's tweet this morning taking a little bit of steam out of all those things, and oil prices fell down about 60 cents. trading back in $67 range here. >> oil prices are taking an elevator to the other floor. three things going on. one is what you talked about, the opec, non-opec meeting in that cooperation, continuing to squeeze. secondly is strong demand, china now imports 75% of its oil and the third thing is the political calendar is may 12th when trump makes his decision about iranian sanctions.

and then you have the rising tension over taiwan, obviously syria. there's a lot of forces that are coming together. butnow you have the president -- >> we'll dig into that in just a moment let's talk about the power of opec for years they were basically powerless, nothing they could do, it didn't matter whatever they were going to do, the united states would drill more and have more production coming out is the difference here the demand picture >> demand. i think, also, for a couple of years, shale was this disruptive technology it's now been simulated to the market u.s. market is strong. the obituaries are soon, once they got over non-opec, saudi/russia relationship, a new thing, an important feature of the market. >> interrupt, steve sedgwick -- sorry, dan, stay with us he's live from saudi arabia where opec and non-opec members

are meeting today. we spoke to an important player in this arena, steve. >> most of the best lines i've had over the years on opec as well look, i mean, as dan well knows, venezuela has flattered some of these compliance figures here in the opec-non-opec deal it's something i know dan is worried about for the global oil complex. in terms of who i spoke to, i spoke with the saudi oil minister and the russian oil minister i just saw the tweet where trump is saying opec is at it again. this will not be tolerated as well there are a lot of people in the industrial oil complex in the united states who will be very thankful of what opec have done. in fact, opec ended their russian allies, actually not bemoaning what's going on with shale, but almost a necessary evil let's face it. there are a lot of people stateside who want to see a form of industry independence

a lot of people want to see a continuation of the export market all of that is pretty much happening on the back of these higher prices. so, yes, the president is right for the consumer, $3 gasoline may be a bit of an issue as we get to memorial day. for the industry, u.s. shale industry, this has been a big boom and that is something the russian oil minister insinuated to me earlier. we'll try to get that sound later. back to you. >> just to clarify, what you heard from the russian oil minister is they are in no rush to exit the opec restraints? >> yeah. >> okay, great, steve, thank you. >> yeah, i mean, this is very opaque now, becky. what we had previously is we had some really exact ideas, i.e., they wanted to get the global -- started the deal at 2017, and they pretty much evaporated that now they're looking for new parameters to carry on as i heard from the saudi oil minister, they want a new menu

of choices to be presented to ministers on the june 22nd oil meeting which i'll be at in vienna what are the new parameters going to be? we saw one of them walking past there. that was the iraqi oil minister behind me, incidentally, and they haven't always adhered to full compliance of this deal new menu of parameters potentially. it's not now about five year inventories, that goal has been reached. what i heard from the opec president and the saudi minister as well, they're going to look at investment and they want to see long-term investment absolutely for mr. novak, no rush to exit, certainly that's what i was hearing. >> steve, thank you very much. let's get back to dan yergin and get his reaction to those comments dan if the russians are sayi saying -- that was my next question we hear the russians might want to sell more oil they can finally make money and

use the money. >> becky, they can do the mathematics and know this restriction for them, it's been about 300,000 barrels a day has basically doubled their oil revenues so i think the message they're now giving is that all of them want to keep this thing going until the end of the year. they really like the money that they're making. >> you referred to $70 oil as a new floor, maybe a new range that we're in. it's not necessarily that high, if that's where it stays we got above 70 in late 2009 i would imagine somewhere the ten-year average price is not far from 70. if it's just that, is it okay for the economy, is it okay for demand remaining where it is >> it seems that way it's obviously the question, and some of that was coming from jeta, if you go above that, if you get to the $80, someone mentioned a target for opec oil for brent, what does that do to demand i think it will have an impact on demand. and also you get the political response, the president looking at gasoline prices and reading

how motorists will respond to it we're jumping on that issue. >> trump's tweet this morning complaining about those higher prices may have sent wti down slightly, although right now we're back above $67 is there anything that he can do about this though? >> no, there's not much except for talking about it it is those factors that are out there. in fact, other actions that we'll take, let's say on iran would have the opposite effect if the sanctions go back in place, that takes some of the iranian oil off the market, that's what's being anticipated. >> that's why you'd want to do it if he knows he's coming out, he wants to -- >> wants to talk it down ahead of time. >> and he moves -- there's that compartment there, which is the iran one, and this compartment over here, which is the price at the pump. >> can release some spr? >> i don't think so. >> dan, what do you think actually happens to prices we've heard the saudis would

like to see $80 to $100, looking at the rest of the year? >> i've put a lot of emphasis on the geopolitical risk and the fact you could have spikes in there. i think if you do get those higher prices, if you get the higher range, you have an impact on the global economy, impact on demand and sort of self- -- it will self-correct. >> great dan, good to see you, thank you for joining us. coming up, yes, it's 4/20 day, cannabis connoisseurs i think that's the proper name i think marijuana is kind of slang as well. >> really? >> yeah, kind of. >> cannabis is the official scientific name? >> cannabis, yes but in california, where weed went recreational earlier this year, sales, it says here, have gone up in smoke that story is next, as we head to break, here's a look at statistics about the recreational use of marijuana as i look at mac. "squawk box" will be rhtacig bk. ♪

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crowds to come, the first year users can celebrate the holiday legally in california. the big iconic celebration in san francisco is at a place called hippy hill. you see tens of thousands of people, take a look at these pictures from last year, just gathering to celebrate the holiday. but despite the changes in state laws, a lot of cannabis entrepreneurs we've been talking to say a lot more work needs to be done in removing the barriers a recent report from cannabis data firm, they found that in the first two months of legalization of recreational marijuana sales in california, that there were $339 million worth of cannabis products sold. now, if sales continue at that same pace, and that's important to consumption, that's still 11.5% down from state estimates. cannabis entrepreneurs tell us the problem is burdensome regulations that prevent a lot of businesses from coming online that's known a yelp for

dispensaries, tracking licensed and unlicensed companies they gave us this map that shows 85% of cities and counties -- 90% of the state's marijuana business is still in the black markets. that number is not shrinking the state tells us that they do believe that sales will continue to increase as more businesses come online. they'll come out with their estimates or their real numbers next month back to you guys. >> aditi roy, thank you very much when we come back, earnings take center stage next week jeffrey's equity strategist is expecting big things that's next. former commerce secretary carlos gutierrez will join us to talk trade in china, he just got back from the region he'll be joining us with an update stick around, "squawk box" will be right back.

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>> announcer: early reaction to ge's quarterly numbers, how well is the turnaround strategy for the iconic blue chip working, "squawk on the street" today earnings deluge. general electric and honeywell among the big reports, numbers and stock reaction coming up. >> new this morning, president trump calls out opec, and says oil prices are artificially high we'll show you what the

president tweeted. >> and rate shock, yields ticking higher, but is it more noise than signal? we'll have the debate, the final hour of "squawk box" begins right now. ♪ >> announcer: live from the most powerful city in the world, new york, this is "squawk box. ♪ take you higher. >> always a message with the music. >> 4/20. more grateful dead good morning, welcome back to squawk box on cnbc live from the nasdaq market site in times square andrew will be back on monday. he's celebrating 4/20 -- >> no, he's celebrating ten years, anniversary the futures right now have been all over the map, just

barely negative again now down, it depends on what you're looking at, the dow is off by 7 points. >> that's weird, same number. >> up. >> never mind. and the s&p is up, less than two. >> we like watching paint dry. >> we do watching paint grow. >> good one. >> grass dries rocket surgery treasury yields right now are starting to look like maybe now's the time, some day, that we see a three handle, 2.919. >> would you put a bet on that right now? >> no, probably not. i've learned pavlov's dog, the boy who cried wolf general electric, though, reported results today morgan brennan joins us now. want to see -- is the stock still -- yeah, added to its gains, 5.25 of a percent. >> the reason here is that expectations were low in this

report largely they beat the expectations 16 cents per share 28.7 billion in revenue, also better than expected the company reaffirmed its 2018 guidance, a lot of folks were coming into this expecting we might get another cut on that guidance so that was taken very positively a dollar to a dollar seven earnings per share for 2018. 6 to 7 billion in industrial free cash flow now, free cash flow adjusted free cash flow for the last quarter as well for the first quarter coming in at negative 1.7 billion. but that is according to ge in line with their plan, and it was 1.1 billion better than it was a year ago did take a reserve charge of $1.5 billion that is related to the wmc investigation, the pre-crisis subprime mortgages written by ge that's been under investigation by the doj for the last couple years. on the cost side, they've been aggressively cutting costs, saying they're on track to

exceed the cost reduction goal of 2 billion lastly the ceo is saying, quote, the first quarter is a step toward executing our 2018 plan and we are seeing signs of progress in our performance, adding that aviation, health care, renewables earnings, and baker hughes continues to execute on its plan. power has been such a pain point for this company in the last couple quarters that, quote, the industryn't co -- what management has to say when they get on their earnings call that happens at 8:30. >> morgan, thank you we'll hear more back after the earnings call. >> absolutely. in the meantime, let's get you caught up on a few other reports this morning as well honeywell earning $1.95 a share. better than the street was expecting. honeywell's results were helped by higher sales. the company also raising its forecast for the full year, earlier the stock was up by 2.5%, and right now up by 1.4%

earnings coming in -- aided by growth and loans and net interest income too. but revenue did fall below forecast the stock still up by 10 cents and stanley black and decker, beating on top and bottom lines, lowering its full year -- one-time tax charge. waste management topping earnings expectations, but revenue falling short of estimates. the ceo, jim fish, reaffirming full year earnings guidance, the stock is off by less than half a percent. >> earnings season, so far, off to a strong start, our next guest says that average first quarter growth could top 20% for both large and small cap indexes. joining us is steven desantis, equity strategist at jeffries. >> our firm's not going to appreciate that. >> second out of three

it's jeffries. you're an accepting guy. >> exactly. >> is there a reason -- is it a positive to see that it's both a big cap and small cap, our 20% plus it's not always the case. >> actually, it's going to be -- it's a good thing. what ends up happening is the fact that large cap earnings growth have been much better than small cap earnings growth and now we're playing a little game of catch up here for the smaller cap. that indicates the u.s. economy is doing better because smaller companies are more tied to -- yeah, they're a little bit more domestic, more tied to u.s. gdp. if you get earnings growth going above 20%, kind of tells you the economy is humming along here, and i think as the year progresses we'll get to see better earnings growth down the cap which supports arcades for small beating large at this point. >> so small beats large. does that mean that they both go

up, but small goes up more does that mean they both stay the same, but small is a little better does it go down less we've played a lot of this forward, a lot of good news reflected in stocks. >> absolutely. i think a lot of things is that, okay, we actually have to have 20% earnings growth given the fact we had such a strong year last year for equity markets and so i think as we move forward it's going to be a choppy market. i think volatility was suppressed last year, it was unbelievably calm year, we're going to get chopped here, our forecast is that we'll see probably 10 or 12% appreciation for small cap from here, less so on the large cap actually, since the bottom of the market, somewhere in early february, smalls outperforming by 400 basis points. that, again, kind of continues as the economy gets a lot -- you know, gets a lot stronger. >> if you look at the list of things that people might be worried about right here with regard to the outlook for profits, profit margins, costs

going up, commodity costs going up, wage growth. are smaller companies less equipped to absorb that, better equipped >> unfortunately small is less equipped to absorb kind of the change -- especially on the wage side, i think one of the reasons why large cap earnings were better than small cap earnings for, you know, six quarters in a row is that we did have wage growth inflation that maybe not necessarily you're kind of seeing that in the numbers but smaller companies definitely got hurt we really didn't see much changing in terms of the margins. i think one of the things that i would caution people is really when you talk about trade wars, and you say, okay, small cap is more domestically focused, that's not necessarily a bad thing for small, you've got to forget that. small cap companies are a lot of times suppliers to the large cap companies. the large cap companies are getting squeezed because of tariffs, you're going to see it in the small cap side a lot worse. so there's sort of the tail that wags the dog you've got to have a very good

global environment, good global growth. >> so if you go back to the lows of the financial crisis on the s&p 666, and you we're 2693, so not quite a four bagger, but pretty darn close, that sounds like, wow, this has been -- okay, bear with me go back to 1999 when the dow hit 10,000 or whatever, get a 19 or 20-year return it's really midly. is this an extended long in the too bull market? do we view it as 5 or 6% a year for 20 years >> it's more the fact that when you look at where valuations stand, coming out of '99, valuations were sky high. >> so we're back to that. >> lower returns, and i think at this point you have to expect lower returns given the strength of the market since the lows of 2009 and so we're not going to

probably follow earnings growth this year in terms of equity market performance again, last year, earnings growth was single digits, and yet the s&p was up over 20%. you're anticipating better earnings growth. when we wrote our note about 20% earnings growth, we said we have to see 20% earnings growth if we don't get to that forecast, i think we go back and maybe retest the lows that we saw in february. i think it's a concern for people. >> i wonder if, you know, if the -- you know, the multiples we're seeing right now in the market have come down as earnings have gone up to sort of justify -- it's not as rich as it was a year ago. >> right. >> it's not 20 times or 21 times earnings i wonder if the multiples now are already baking in 3.5% on the ten-year. >> i don't think 3.5%. i think actually the jeffries forecast is for 3.5% we're at the high end of the street on our forecast i think people are anticipating -- >> multiples need to contract

more if that happens >> i do think you're going to have -- again, you're going to get better earnings growth so you have the potential for double earnings growth. >> offsetting. >> with the fact you're not going to have double. >> treading water? >> corporate yields. >> i think valuation stocks relative to that look about neutral. so they don't look -- >> don't you think that even now that multiples are discounting a rise in rates already? i don't know if they move down with every -- >> they're counting for more rise in rates, perhaps, yeah. >> generally people are -- you were saying this before where you were more skeptical of rates bouncing over 3% i think there are -- there's definitely a peak, there's a group of people that don't think rates will go much higher. for me personally it's a step function we had a big jump up in rates, 260 to 3%. we backed off a bit. maybe more inflation we get another jump up in rates, we settle back, we get another jump up in rates again, that's going to impact

equity performance so it's like we saw -- >> joe zidle made the point earlier that it's going to impact bond portfolio performances in a big way too. if you're looking for something to offset rising inflation. >> the problem, if you look at it that way, people will not prefer bonds as performance starts to weaken unfortunately we've not really seen any break in flows going into bond fund there's still a generally steady stream of money supporting that. >> now you're talking about a yield on the two-year higher than the yield on the s&p 500. >> you can go money markets now and you're getting the same yield as you go on long bonds a year or two ago. >> exactly. >> at the beginning of the year you're seeing rotation out of high yield that is something that i think, now, i don't want to make it for the overall market, but i do think that you can start to see high yield spreads widen out companies that have lots of debt on their balance sheet that have to refinance at higher interest

rates may be at risk for weaker performance. it's something we've cautioned i don't think people are on the same bandwagon as we are on that case. >> great, thank you. appreciate it. >> thanks. >> and steven. >> yes. >> desantis. >> jeffries. president trump takes on opec former commerce secretary carlos gutierrez on what's next for global trade he just came back from china and mexico stay tuned, you are watching "squawk box on cnbc. nobody's putting their money into equities. they're not investing in commodities or fixed income. what people areally putting their money into

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welcome back to "squawk box," everybody, here's what's happening. in a tweet this morning president trump calling out opec, writing looks like opec is at it again with record amounts of oil all over the place, fully loaded ships at sea, oil prices

are artificially very high, no good and will not be accepted. this tweet comes as opec and non-opec members are meeting in saudi arabia this weekend. in response to the tweet, oil ministers said at the conference that oil prices are, quote, not very high. he also said everything is now fine and the market is stabilizing. two different sides of every market, opinions on both sides of these if you want to take a look at oil prices this morning, 67.95 wti was trading above 68 in fact, above 69 yesterday. faced pressure yesterday and additional pressure this morning on the street. >> after that tweet, wobbled about 1% it's bounced from there and it's been on a pretty good run. >> you wonder what the president can do he can tweet about it and raise concerns. >> can you voice that view to saudis, theoretically would like to have a good relationship? yeah, i guess. not true that there's a tremendous amount of oil stored on barging around the world,

more than normal you can view prices today as either high or low we first got above this level on the way up in 2009. >> i think they're high. i like them lower. >> people like them lower. it's proven psychologically, people register the higher prices -- >> i like the register when prices come down. >> i like houston, and oil company. but if trump wants lower oil prices, people that hate him are going to want higher prices. the minute -- if he were to say, wow, i like the high -- people would be -- >> tweeted a picture this morning of prices at the pump how theorizing back to the same levels we haven't seen since 2010 or 2011. >> yeah, 2010, 2011, what was unemployment then? what average weekly then >> i wish it was free. if we could do cold fusion, the entire world would be better off. >> except for we're not even in the summer driving season. this is demand from china.

>> i understand. >> you don't want $300 -- when it's too high, it's bad. >> theoretically if it's too low, it's bad. >> it's bad for the industry. >> people think $10 oil in the late '90s got us the tech bubble, so much money floating around. >> nice, we like money. the latest round of nafta negotiations wrapping up and a possible deal could be on the horizon. joining us is carlos gutierrez he's the chair of thealbright -- he visited china and mexico in the last two weeks where trade was on the agenda. mr. secretary, thanks for being here. >> pleasure, becky, good morning. >> give us an update. >> my first visit was mexico what's interesting, i think most people in the business community and the government community believe that nafta is going to

survive, that there will be a deal, there will be an agreement. so they really have turned to local politics and now they're worried about lopez who they call ambulo, 22 points up, left wing, populist, anti-american, that's what's on people's minds now get through nafta and get a deal are we ready to go back to the '70s and '80s when mexico was a protectionist country? >> but all in all, you think that odds are likely that we'll see a deal. >> i think so. >> what makes you think that >> there's a sense that rules of origin on autos will be fixed and they'll probably e7nd up wih a regional rules of origin about 70%. >> regional, meaning from any of the three countries?

>> from any of the three countries. the u.s. originally wanted a rules of origin for the u.s. only, which in a trilateral agreement is really unheard of that didn't really fly i think they'll end up with something around 70% the sunset provision is pretty much out that was going to be a formal renewal of nafta, every five years, which is not good for investors. now it's going to be a checkup on nafta, let's talk about what we can improve, how things are going. so that's pretty good. then finally the dispute settlement, the u.s. wants to pull out that's a problem for u.s. companies because essentially what it does is it takes away government protection from u.s. companies. so that's a big concern. but having said that, we're going to end up with an imperfect deal as all trade deals are, but it looks like nafta will survive and the president wants to turn his attention to china, and that's going to be the big

battle and the chinese are expecting it, although they're very puzzled about what's coming out of the u.s but that's going to be the big -- >> why are they puzzled? >> they're hearing mixed signals. they really don't know what is going to happen. the president will tweet out something positive about president xi the next day he may say something different. the concern over there is that president xi has just been given the opportunity to be president for life he has unbelievable powers he's at the peak of his power. they've reorganized the government they've created a supervisory branch he is -- he has been given power and he has to show why he's got it so whatever the u.s. does, you can be sure that china will respond because they have to respond. this recent action to prohibit sales of inputs to zte, that's a very big deal. that basically puts zte out of business unless they can

scramble and find suppliers. >> but zte, let's be fair about this, if you look at what they did, they were trading with iran, they were trading with cuba, they were trading with all of these countries that they're not supposed to be doing, they were making violations with north korea even, they said that they would not do it, they would stop, they were sorry about it, and they went ahead and paid their employees bonuses. why would the administration turn a blind eye to that >> you're right becky. the chinese public at charge just hears zte is getting bullied. >> right. >> you know, it just -- it's misunderstandings. >> you talked about in mexico, and we hear a huge rise of nationalism in china too what's the risk there? >> well, nationalism, there's no question that nationalism is on the rise in china. there's no question that it will be on the rise in mexico and these two countries have, you know, history looms large, especially with trade.

what china is waiting for the u.s. to decide on the 301. that should be within the next, say, four months $50 billion. tariffs on $50 billion of revenue. china has said we will respond in kind, 25% on 126 products that's where it all starts then the u.s. has come back and said, well, we're going to slap tariffs on 100 billion that means 150 billion total the problem is, the chinese can't do that because we don't export 150 billion, we export 120. it's just going to get broader and broader, for example, the committee on foreign investment in the u.s. is going to expand its national security definition so we will be able to reject more acquisitions. so broad come, qualcomm, alibaba, money gram, and they'll retaliate in kind.

if the chinese economy goes from 6.5% to 4% growth, we will regret it. >> mr. secretary, thank you, we appreciate it. >> you got this guy? >> what is it? >> is he going to be there at 9:00 when we're leaving? what's he got in that -- he's got munchies or pot? >> happy 4/20. >> i'm going outside most etfs only track a benchmark. flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

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♪ good morning, everybody, welcome back to "squawk box," we have live from times square on april 20th i'm becky along with joe kernan and mike santoli zte is blasting the united states' decision to impose sanctions on the company u.s. banned american companies from selling to zte for seven

years. zte says the decision is unfair, endangers its survival and hurts the interest of many u.s. companies. however, the company has been cheating and breaking sanctions, selling all kinds of things to countries like north korea, the sudan, cuba, among many others, iran and even when they were caught they said they would stopped and then they didn't in the meantime, facebook is in the cross hairs of another set of government officials, this time in indonesia. facebook has 115 million users in that country. regulators have given the company a week to provide more information about how personal data was misused and lance armstrong will pay $5 million to settle claims he defrauded the u.s. postal service. he had been sued for $100 million in damages the claims were brought by floyd landis. >> let's get a check on the markets and the futures have been flatlining for the entire

session, now back down about 40 on the dow, the nasdaq down 27 or so, and the s&p down 2.5, and the weakness in the dow, in spite of dow components, general electric which is indicated now it's really high, 14.85 to 14.88 after closing at 13.99 that's about -- what is it, 6 or 7% rise in the shares of -- >> however, that's only good for about five points. >> right, because it's a low price stock, exactly that's true. >> all right, joining us right now is jim yuriel. he is also a cnbc contributor. we're getting to the end of this week where we've heard earnings reports from a lot of companies, what would you say as we head into the weekend jim cramer has been pointing out things look great on monday, but by friday everybody's worried about what could happen on a friday is that another one of those weekends >> i don't think so. i think today is fine.

we're looking at a big -- murder's row of earnings as we look at that, earnings have been great. they're probably going to continue to be great i think the risk would be short going into those earnings report but this has been a fascinating morning already, it's kind of a lot of ask for ge to be the one that saves us today. we're going to need something else someone came out and suggested that oil price wasn't dictated by normal market -- by normal market mechanics that's blasphemy it seems if oil goes down on that too, that could be another positive. >> what else are you watching today? what's the mood and the sentiment on the floor >> the whole week has been characterized by rates going higher and the stock market's ability to deal with that. now, my opinion is this whole 2.5, 3 month period can be boiled down to that. we can say it's about tariffs

and protectionism. that's not the case. we've gravitated from a period of really, really low rates to low rates with a positive business outlook to now rates actually going higher. we have to see if the earnings are going to be good enough and the data's going to be good enough to suggest that we can live in this higher rate world the interest rate curve is flat. when it gets this flat, it doesn't necessarily say there's a recession coming up. but it does say we're probably closer to the end of the tightening cycle to the beginning. i'm not sure i agree with that the one thing i think is positive, the spread has leveled off the last three weeks that causes panic, but right now it seems okay. >> jim, to take a step back, the higher interest rate world, we're talking about the tenure below 3% is this something that, okay -- >> i get it. >> let's calm down, everybody, see where we're headed do you think what we're seeing in stocks right now really is a reflection of this guess that interest rates, the tenure's going to push beyond 3%, maybe get to 3.25%

>> it's not just the level it goes to, but the pace it gets there. i think if it grinds there slowly, i think that it's okay i know it's bizarro world calling it 2.9% tenure rate. we don't really know the overall understood lying strength of our economy. it's been dictated by unbelievely low rates for so long 10 to 14% of the companies now are technically zombie companies. we have to see how they can handle higher rates. there's a lot to uncover as we move to this higher rate environment. i know 3% is not high historically. >> jim, thank you, have a great weekend, okay? >> you too, becky. joining us, gila buff. looking at your comments, ghi, they're timely here, your view, the recent move up in the ten-year yield and the long end

of the curve moved down in prices has been based really only on oil prices, and you're not sure that's a real signal at this point and you think we are closer economically, i think, to the end of the cycle than the beginning. i don't know whether you think -- we're not headed to 4% tomorrow, in your view, i guess? >> no, you may recall, this was probably five or six years ago, you and i had a conversation, what i said is we're not going to see ten-year yields hit 4% in the next decade, not the rest of your career. i joke because my career is hopefully longer than yours, joe. >> don't count on it how old are you? >> you'll still be there old enough. >> and you'll get wisdom as you -- as i have as i've moved through the 50s. >> the last few months in the interest rate markets have imparted wisdom. i'm talking about a narrow period, however, the last couple weeks or so we've seen oil prices jump up, about $10 a

barrel there's nonlinearity, how the inflation break evens impact the interest rate markets. that's the short-term driver one thing that is notable over the last couple months each time we've seen a selloff, we've been rejected at a lower high in a ten-year yield by a couple basis points yesterday, we were rejected at the 293 level in round numbers so i suspect that a technical basis we have seen the top, at least for the next several months in the long end of the u.s. yield curve. >> yeah. you ever heard of andy rooney, guy? >> i have, indeed. >> morley safer, john mclaughlin, he was 91, and he missed his friday show, and then died on monday at 91 so if you're planning ongoing to 91, you might outlast me but i don't know if i'd bet on that. >> perhaps. >> perhaps, perhaps.

i don't know you put money on the line, that's a lot -- we don't need to do that. so we have a much calmer sort of a low stress occupation here i'm betting on myself here you're talking about 295 as that's resistance. is that support or resistance you're talking about >> that would be support kind of think upside down. >> on the ten-year. >> one of the longer term themes which is really important is that the faster the federal reserve responds to threats of higher inflation, the more that inflation expectation gets popped and the more long rates have to come down. when we look out six, 12 months, thinking about three, maybe four marks here, the irony is it will push long rates down your prior guest talked about flattening the yield curve i suspect we'll be pretty close to zero coming into this year.

at least one piece of good news, the difference between that 50 basis points and zero in the shape of the yield curve is good for risk assets, things like corporate bonds and high yield bonds. >> don't we need to -- i know that our bonds, we key off these domestic metrics that you're talking about. but, i mean, the rest of the world yields need to rise before we become able to move much higher aren't we still tethered to conditions in the rest of the world? >> to some degree. so a japanese investor call it about a year ago or so because of the cross currency swap markets was able to actually generate a very substantial positive yield in the treasury markets. because of what's happened at the cross currency swap markets, not to get into too much market plumbing here, the u.s. markets have become less attractive to foreign investors. you can see that as one coeffect

that caused the spread to widen last few months. the demand from overseas has slowed ironically even though the yield differential ballooned in the last year in round numbers. >> we've got to go, you know, captain kirk >> i do. >> shatner's 87, and he's -- >> and one of the greatest actors of the last half century. >> he's running around on the amazing race, beating people your age, silly, on this amazing race thing. >> you've got to compare his previous -- he was running around the galaxy 50 years ago. >> he was until he ran around l.a. as t.j. hooker. different, guy lebas, i just like saying that. >> have a great weekend, joe. >> one data time don't forget that. nothing's guaranteed for any of

us. >> guy, you're going to hear this for a long time. >> i hope so, i hope so. >> you better hope i don't remember. >> i like saying guy lebas. >> good luck, guy. up next, hbo's biggest shows, "west world" is back this weekend, an important premiere for one reason, we will give you a hint, a big rival is snapping at hbo's heels, guess which company it is? we'll tell you when we come right back this scientist doesn't believe in luck. she believes in research. it can take more than 10 years to develop a single medication. and only 1 in 10,000 ever make it to market.

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♪ all right, it seems like just about every day we hear about another case of a cybersecurity breach get this here's a little bit of a twist on those breach stories. sun trust bank says an ex-employee may have attempted to print out information on 1.5 million clients and share it with a criminal third party. that news coming out just moments ago during the bank's earnings conference call sun trust says the information included names and account balances, but not personal information. sun trust says that it's not seeing any evidence of fraudulent activity related to this incident. again, we think everything happens in cyberspace. this is one more reminder that there are old-fashioned ways to

get some of this information too. also, one of hbo's most popular shows, "west world" is back for season 2 this weekend, comes just as one of hbo's biggest rivals reveal here netflix reporting better than expected growth, that was the mystery chart. what does it mean for the content wars julia boorstin joins us with more. >> the first season of "west world" was the most watched of any hbo original series. now season 2 is returning sunday night, and hbo has been investing big in bringing back that fan base to the show that cost a reported $100 million to produce. now, hbo has a lot riding on it. it's other mega hit, "game of thrones, south by southwest, and hbo reported higher ever

increase in domestic subscribers last year in best revenue growth in more than 28 years, with 142 million global subscribers, including 5 million for direct to consumer hbo now. now, research says for at&t, fighting to buy time warner -- yesterday the ceo testified that at&t needs to own what he called, quote, premium content that, quote, drives consumer engagement just like hbo stevenson also pointed to rival netflix and its valuable viewing data it's gaining on hbo in terms of subscribers, adding 7.5 million subscribers last year. netflix is spending $8 billion on content this year. joining us with more is cynthia littleton, she's managing editor of television at variety. and cynthia, we keep hearing again and gain, randall

stevenson, content is king, he needs more content watch what wall street's really rewarding right now is it's about over the top and how to deliver some of that content how do you kind of frame what's happening right now, how this battle is shaping up >> well, i mean, that is one of the most frustrating things, i think, for traditional hollywood, like hbo, hbo was the pinnacle of television netflix has come along, a completely different company and business paradigm. the biggest frustration for people trying to compete with netflix is there is no pressure to deliver earnings like there is for a time warner or comcast or any of the other traditional media giants it's a whole different ball game for netflix. >> netflix, not only no pressure to deliver earnings, but in a sense, no pressure to deliver ratings. that's why they cling to awards and obviously their subscriber numbers are implicitly, i guess, reception of their originals but it's interesting to have to it say, look, we just need to

know the customer data we need to know who's consuming exactly what to target ads to them or know what they need. >> that's been one of the big selling points of the at&t time warner merger was that if we put at&t's wireless platform together with time warner's content, that the content providers can get a lot more visibility into whose watching the shows. that is something netflix has that traditional tv doesn't have to the same degree. >> so what happens if you're looking at netflix versus some of the old line media companies, who should be concerned on the media companies and who should netflix be concerned about, if anybody? >> netflix's glowing earnings on monday sent a chill through hollywood in the sense that there is -- they are writing enormous checks for content. there is no slowdown in their worldwide -- >> a chill through maybe the movie studio executives. it didn't send a chill through the actors and the writers and

the producers, and me, how great is this? that people are killing -- >> more content. >> more content, go wild, 8 billion, perfect, i need it. i still can't find anything. >> they are writing eye popping checks to the top creators in the business it's just people have a bit of whiplash it's amazing how quickly that netflix has risen to this prominence, and has literally rewritten the rules of how content deals are crafted, the kind of paydays that top creators can expect. it's really been quite -- >> the variety too you should be happy, aren't you? content is -- i mean, it's getting more and more valuable, you know, the 75-inch tv it's like life is good. >> with 200 channels and 500 shows out there, there's no shortage of things to cover. >> great, isn't it you're not happy >> we're happy. >> have netflix and amazon proven, though, that besides the checks, they're a place everybody wants to work with, or

are they viewed by hollywood, this is dumb money being swung around >> there is some of a downside, there is a feeling in hollywood that netflix has so much stuff your show can come out, if you don't catch can come and go very quickly. if you get lucky, if you're a "stranger things" or "the crown" it's lasting >> yeah. >> that's their strategy keep the subscribers coming. >> i need to know everything. i need a rotten tomato score on everything. >> that's what i did. >> i look and i i think why didn't i know about this i find something somebody has been watching for -- >> the last seven years. >> there's a new e-mail in my inbox every week

whoever cracks that will -- >> netflix and amazon have on their own algorithms they figure out what i like to watch and they show me those things. >> yeah. mark zuckerberg knows what you like to watch, too. >> only he's selling it. >> yeah. thank you very much. it's great to have you when we return, we're counting down to the opening bell we'll check in with jim cramer next check out the futures. we'll be right back. there are people in the investment industry who hold themselves to a higher standard. they are called "cfa charterholders." demand the best. demand a cfa charterholder. cfa institute. ♪ most people come to la with big dreams. ♪ we came with big appetites. with expedia, you could book a flight,

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head down to the new york stock exchange jim cramer joins us now. i'm sure general electric you've looked through the numbers we had a couple of kitchen sink quarters we had an analyst said they turned 40 cents in the first quarter. they earned a nickel above expectations but it was 16 cents. >> there was no guide down big bear numbers i think you've got jpmorgan i think you got to be happy. i like the free crash flow i thought it was going to be worse. and, you know, i mean, aerospace is saving everybody. it's incredibly strong

and health care, he's done a great job. looks like the disposals are on target i don't know i think it bottomed. i don't know the upset maybe something in the fall. congratulations john flannery. didn't do what the bears thought he was going to do it's a nice guide up. >> and getting rewarded. have we figured out what is the price of oil i like it to be zero but becky is right do we have for the society or the world. what is the best price >> i don't know. >> we are finally at the end russia still got some. saudi got some venezuela. the series of countries that need to spend more if they don't spend more we'll see a higher price i want to thank becky for the note about what happens on friday i think the focus will be on china and apple.

china is not done. i think they're still. >> nervous as we head into a weekend. >> yeah. >> china is a wild card. i think the cte thing is bigger than anything they expected. i'm waiting for more retaliation. >> how does zte defend itself, though >> crooked company we had to do this. i mean, we can't let them walk all over us. >> okay. all right, jim, we'll see you. "squawk on the street" starts in about three and a half minutes don't miss the interview with neel kashkari. he'll be live at 2:15 p.m. eastern time let's begin.

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all right. a final check on the markets this morning this morning we've been watching the futures after a down day for the markets yesterday. they've been mixed we've been up slightly we've been down slightly right now dow futures down by about 12 points. s&p up by just under a point the nasdaq down by 12. oil prices this morning getting

some pressure after donald trump tweeted about opec right now wti at 67.86 and the ten-year note we've been watching closely is yielding 2.99 drum roll, please. >> i think it's worth noting >> yeah. mike, thank you for everything. >> thank you that does it for us. make sure you join us on monday. right now time for "squawk on the street." welcome to "squawk on the street." stocks are shooting for the second positive week in a row. haven't done that since february, as earnings takes center stage from ge along with a presidential tweet about a new asset class now. oil. we'll get to that and more europe is mixed. keeping an eye on the yield curve after yesterday's