welcome back to "squawk box. final check on the markets dow looks like it's going to open up higher by 52 points. the s&p looking to open higher ten-year almost at the three level. we're at 2.966 we'll watch and wait and see what happens throughout the day. make sure you join us tomorrow "squawk on the street" begins now. ♪ welcome to "squawk on the street." earnings season comes to full boil this week 42% of the s&p market cap will report premarkets mildly positive and added to gains this morning. same story in europe where the pmi have been steady today the ten year is the big story, as andrew said we got to 2.9972

we'll see if it cracks 3% for the first time in seven years. stock futures signal a flat open the ten year nearing 3 as investors bet on more inflation and tougher monetary policy. the busiest week of earnings faang set to report and apple looking for a rebound this week. and shares of hasbro down. a big earnings miss in due part to the toys r us bankruptcy. the ten year is in big focus today. it's come within a hair of reaching 3% for the first time since january of 2014. you have the dollar rallying a seven-week high today helping to put pressure on crude after oil prices rose above 3-year high last week joe mentioned the stance the treasury is taking softer. it took the wind out of aluminium and a lot of commodities. >> i think that's important. last week whether it's a stanley black and decker proctor and gamble

we keep hearing about it we keep hearing about it so anything that brings commodities back down in any way is a huge positive for the stock market hasbro cannot believe anyone thought it was going to be anything other than the worst quarter. stock was down 7% at one point we're willing to have a softer stance on trade gets people excited. treasury secretary mnuchin's comments over the weekend. i'm concerned about tariffs. >> you said working on a piece about what is worse for markets tariffs or the ten year. >> i spent a lot of time with first rising that's where the strongest part of the economy is in in the tennessee area okay and they said, look, you know, brian has been on the show numerous times and he said, you know, we have such a strong book of business if you think that this move is going to derail the steam. you're craze

it's getting stronger and stronger he said it's not a surprise. the interview with lloyd saying do not trust the ten year to be necessarily a perfect sign of what is going on in the economy. i felt good. full steam unless weone.

it doesn't appear there's any widening of anything going on. >> no. and the s&p now. and that puts this a drive by of $1.5 million offering of $10.5

year bonds that's an attractive piece of paper. there's a company that is so proud of the earn rate. >> it's amazing. but there you go billion and a half ten year money. what are they paying, jim? >> 4.875. >> yeah. june 2028. >> not bad. >> right over a three on the ten-year that's it 1.875. 1.8. >> how little they are going to pay if they lose ad billion. know who is raising 96 the u.s. $96 billion this week in two, five, and seven. >> have you seen netflix it's better than treasury. you know, in west world we trust. come on. >> west world is hbo. >> sorry i didn't stay up late. >> here is the big problem with

netflix. okay you watch their product. you want to own the stock. okay >> you're putting netflix and tesla together >> netflix reported an incredible quarter. >> netflix is out there saying that they're going to lose a lot of money right? >> yeah. >> tesla is not saying that. so tesla is saying it's going to be free cash flow positive by the third quarter according to a couple of weeks ago. >> my point is they're both kind of i think they're both going to lose money only one is willing to admit it. which would you prefer >> netflix. >> i think that's a common response. >> yes. >> tesla, by the way is getting 4.875. >> they're nowhere near there. >> even though one does not need finance. >> yeah. one needs financing. one says one does not need

financing. >> yeah. we're going to get to tesla. >> apple is the other big story today. the share looking to rebound after sliding into negative territory for the year as the dow component fell sharply on friday after, as jim said, morgan stanley cut the iphone sales outlook for the june quarter three of the faang companies set to report on the busiest week of earnings alphabet tonight and amazon's thursday microsoft is thursday. thursday is the single busiest day of the season. >> i don't like to set up at all. i just don't what don't you like? what's the problem >> i don't like anything i don't like the bounce. i don't like the tweets. i don't like what i hear from the companies. i mean, kimberly was good proctor was so bad

kimberly mentioned commodity inflation and the degree they're trying to cut costs to keep pace. >> yeah. it's not good. okay i mean, it's better for alphabet than most. >> i saw a couple of weeks ago the set up was pretty good the tariff we have to get it under control. we have to get it under control. i don't know what that means. >> we have to get it under control. >> the president has to be there. the chinese have to say we're going to get rid of the guy who runs eta and we're going to banish it just like your buddy over there. your buddy. >> which buddy of mine >> i have to give you a hard time. >> get rid of pasco. chinese have to prosecute the ztet it's a huge phone company. >> yeah. >> if they do that mnuchin goes. we start seeing son punishment of the people who steal our

intellectual property. and then it's a better set up. right now not a great set up. >> to your point, jim -- >> i'm listening i'm curious. >> earnings season is about a week and a half old. right. we had some decent bank results. we've had some softening of the north korea story and market is almost exactly where it began. >> that's what i mean. >> i think we have some looming issues facebook consensus has come down, though facebook better tell a good story. and the next quarter will be weak but i believe that every -- i get up now and i look at that twitter file of the president. and when he salutes someone it's terrific or when comey is involved. >> i'm vaguely aware of that. >> we need to see that the people's republic of china come to the table with a series of sanctions against the people who steal from us.

and punish them so we know that zte will no longer be tolerated. where executives lied to our government they need to be taken out and put into a place where they're not doing business anymore right now as we go toward may 1, i can't be sang wid. >> let's try to sneak hasbro here it's a tough day for hasbro. miss by 23 cents citing unsold inventory from toys "r" us. mattell in the red we know the story about the ceo there. brian goldner will join jim tonight on "mad money. >> how many times did brian have to tell you it's going to be a tough quarter. they reported a tough quarter. i mean, who did not think that the ceo told anyone to guide down he went over and over again warning you about toys "r" us. and there's still people who are

shocked? felt this was something you should buy ahead honestly how stupid can people be the ceo is an honest guy he told you over and over again be concerned there were still people who said, you know, maybe it's going to be better it's not so bad >>well, hope springs eternal, i guess. maybe they thought mattell's missteps will be hasbro's benefit. a quarter that hasn't been fully defined. >> a zerosome kind of thing? >> yeah. another toy distributed called walmart out there, too. >> yeah. brian has been on. joe was asking me did the company not guide low enough the company told you, basically, listen, the wrecking ball is coming wrecking ball. >> i haven't been a viewer of "west world. >> it's unbelievable it was great >> i have to get hbo

i let it go. >> you did >> $14.99. >> not at lot on it. >> plus they advertise heavily on the website when we come back the proxy battle david has that we'll get to some of the upgrades plenty to watch on that front today. plus -- >> is it frustrating to you? >> i don't know. more of sara's exclusive interview with bank of japan governor kuroda. what he has to say about trade, the economy, and dow trying to avoid the first fo-duray losing streak since february. we're back in a minute

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the most recent battle between karl icahn and jeff smith at star board and, of course, nooul itself caught in the middle as they grappled with each other for a number of board seats. it got settled ahead of a proxy fight that would have been even more damaging to a company that, frankly, couldn't deal with anymore damage it started when martin franklin, he had been the guy to sell to newell they stepped off the board and he briefly joined jeff smith but franklin dij ditched him quickly. smith was left out there what do i do now many thought he would stand down he didn't. he set up a challenge with icahn. he said we'll give you five seats. no problem, carl

jeff smith had a problem with that by all accounts, they might have been headed to a struggle with each other and a proxy fight and icahn probably would have lost some seats. he lost a few anyway overall, it's a good settlement. now, jim, it's up to a man you've been critical in the past he's a reformer. he's going to be out he knows he's going to be out. robert steele and then bridget ryan will be agreed upon by both and icahn's study from college will not stand for election. starboard gets two plus the one they agreed on that's six directors so that's a lot. that's the majority. >> this is what i wanted the people who are from star board's team are such hitters.

>> you have people who understand plastic business. you've got style people. ke keurig i feared there would be food figh fights and this answers a lot and, yes, it will not be enriched he's going to be on the line if he does a great job, god love him. i'm thrilled this is the settlement i wanted. and i was so fearful of the opposite that smith will get on ica icahn. no longer split. it's accountability. newell goes from being iffy to being something that can be. >> we'll see if they have significant sales, of course some would argue they got too big in terms of their ability to manage the size of the company on

once last week i spoke to jeff smith and starboard. most of our conversation was about the pending battle here is what he had to say on that subject. >> karl and i don't necessarily see things that differently. we've had conversations about the company. we both think that the company is undervalued we think there's operational improvements needed. we think it's been poorly run for the last couple of years. >> nothing you heard there that you disagree with. >> no. it's so good i want them to do well i think these people can help. i think icahn's people wouldn't necessarily be help. i didn't like the idea you own 6% and put some people on the board that aren't that qualified. now they'll have to do a good job to keep his job. if he needs help from these people but this is a stock it will be a tough quarter. not unlike hasbro. they sell strollers and toys "r" us but this is a better situation

and i am relieved. i think it's going to be a much better stock to own than it would have been if smith -- i think smith got a fair point of what needs to be done. i saw what he did and i saw what he did with mar bell and those were two big wins. i'm on board with this. >> there it is. >> we like each other. >> and perhaps the last time we talk about newell for a little bit of time. >> could be. i don't know it's good we can agree on something. during the break we disagreed on multiple things. >> thank you, david. >> thank you. >> thank you cramer's mad dash is up next we'll count down to the opening bell we'll take a look at some of these calls on the likes of verizon, under armour, lulu and more when we come back

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we get started with trading for the week we'll talk kimberly clark. you mentioned it briefly at the open of the show. >> okay. this group has been horrible for the consumer products. last week proctor had open rebellion on the call. when i say that, that's very negative many say do you understand the new world? you understand you continue to have one area that is bad.

i don't want to call it personal hygiene. north american plus six consumer said you have nine personal care very good. volume is very good. $1.68 was the consensus. they did $1.71 2% organic growth. it was a good quarter. you're still fighting the ten-year treasury and fighting bad input costs. if there's going to be a chance that it could turn around it's from lowered expectations and people trying to buy this stock. remember last week they had philip morris that was bad and proctor that was bad. >> philip morris international. >> that was bad. >> a bad quarter. >> down 7% in one quarter. >> the japanese market, apparently. >> but, david, this is the one this is the test case. the reason i didn't like that quarter. >> oh, my.

>> if proctor is negative they said we didn't do that good of a job in a lot of areas. in two areas in grooming. the whole pricing structure is in trouble and a lot of private label aggressive there looming it doesn't have looming kimberly that's professional care division and they were both good so if you want to start believing in one these consumer products down 21% with a well run company. this will be the test case for this group. >> okay. all right. >> got it. i'll be watching. >> and youee kp watching. >> we have an opening bell about 4 1/2 minutes. right now on "squawk on the street." ♪

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which allows them to take advantage of growth opportunities in up markets, while maintaining a level of protection in down markets. so they're less concerned with market volatility and can focus more on the things they're passionate about. talk with your advisor about shield annuities from brighthouse financial- established by metlife. you're watching "squawk on the street" live from the financial capital of the world the opening bell in under two minutes. a lot to watch on this week on the busy earnings season week. a lot on the trade front watching the ten year near 3%. and the journal had a story about low liquidity.

>> you know look, if the earnings are good and we don't have a bad trade war it can go the other way. and to buy 200,000 shares of the stocks that does well will be difficult. that goes both ways. volume on treasuries is clearly an issue again, i just -- if the economy is good, i don't mind. i just don't mind. what did we expect that we were going to stay at 3 the economy is good? well the economy is good. >> i mean, define "good. >> yeah. i think a lot is mandated. a lot of our inflation has to do with commodity inflation that we're creating who knows. if you try to figure out where the tariffs will be on the next hundred billion. >> karl pointed out we'll sell a lot of treasuries this week.

we have an enormous amount raised. >> yeah. [ opening bell ] we look forward to the most exciting >> i love that i love that. that's a big day it's a great day. >> have you ever done that >> many times. many times. >> really? >> in the old days i like the ponies before i discovered the stocks i like how you tim cook at apple. you have the horse and the jockey. >> i get it. >> have you ever been to the track? >> i have.

i've been to belmont. >> you have? >> yes, i have very much enjoyed it. >> >> you've never --? >> we'll go here or there. we end up going nowhere, by the way. a lot of talk here a lot of plan to go places >>well, you never know, david. you never know. >> we have a lot of upgrades today, guys. cat and exxon among them citi goes to buy on cat. for a number of reasons, they say, obviously, we're not early. cat is one of the better performers. >> yeah. they talk about oil and oil is good for cat and global mining is good. they talk about china being better but i think you just named the line clearly we're not early. i think they are late to the game and i'm not sure about that. the last quarter was not that well received. i think this quarter could be better but i just don't go into may 1 possible step up in trade war.

cat is not your pick. >> all right a number of upgrades in retail coors, hans brand, and under armour are three of your s&p gainers today. all on upgrades. >> i love the under armour call. i think they're coming back. haines down a lot. of course, again, that's a played out story, to some degree there's some pricing with jimmy choo i think that's a seventh inning call there's very little liquidity in the stock. the apparel stock. the apparel segment of retail has been the strongest and i think it's going to get like that. >> what do you do with alcoa down 9.5% this morning >> look, you had a short squeeze and if that short squeeze is alleviated, alcoa shouldn't be $11 billion company.

if i was alcoa i would be issuing stock. >> you would >> rebuild they could use a little. >> suffering today, without a doubt. >> carl, when you look at it created $11 billion in alcoa downgra downgrade today. a lot of wealth for a guy doing solar. he's off making the new saudi city. >> yeah. >> i'm not going to play saudi city, just for the record. >> 0 you're not? big story in the journal today about 10 cent music. and the potential for a large i por -- ipo. >> a huge amount of supply hitting us now the 10 cent music deal another china deal there's so many of those most of them are awful and now we got this. we don't want 10 cent music.

i think 10 cents is a company. we don't need more equity coming at us. we need more equity being digested the only good thing about the proctor call last week, they bought back 500 million shares in the last decade the problem is, stocks almost unchanged in the last decade. >> is that another way of saying you think the ipo environment is getting overheated >> yes. >> really? >> yeah. >> really? >> yeah. >> i think i've seen pretty good receptions lately on the big one. >> there will be one too many. it's like a bridge too far in world war ii sp spotify was not an ipo. >> no. back up. >> i like it. >> the 9% of 10 cent music if you put a $25 million evaluation on the company, you're talking about over $2 billion they have on the balance sheet there.

>> spotify was terrific. it was not an ipo. and i continue to think that's incredibly undervalued stock remember anything you don't care about your bill, netflix, amazon prime, spotify i have never examined my spotify bill i just pay it. it's like the irs. there's taxes and spotify. >> but you don't pay hbo $14.99. >> i don't watch hbo. >> your costco membership, i would assume >> now there's an issue. my wife has the black card she's executive. i maintain my gold star card i'm white. i don't have the executive costco what do you pay? >> i'm thinking about -- >> you need an acronym for annuity membership. >> that's a great idea. >> work on it. >> i'm not sure on the amex.

i'm not sure if it's worth it. >> in the san francisco airport, you can get a lot of work done there. you can type and they'll bring you a beer it's not bad check it out >> the man is forever working. >> member since 1980, by the way. >> and they sent you a card. so proud a member since 1980. >> i have to ask you about your tweet today. when the stock market goes down, all these in diapers during the green span era start tweeting how smarter they are than anybody else was this yesterday it might have been over the weekend. >> i had it. like the 3% is not the be all and end all! and come on! >> i remember. >> made fortunes stop it already. care about tariffs because the president has said there has to be some pain. now the market's pain will be in

the stock market that's what the pain is about. in order to get the gain, in order to get the chinese to stop stealing, in order to get the chinese to stop flooding, there has to be some pain. and the pain is going to be in stocks i accept that. >> for the greater good? >> yes. >> for the greater good long-term? >> absolutely. this is my politics speaking i think china is not a free trader they have to be stocks yeah the obsession with free. so what. when we get to three know what the obsession will be? 3 1/8th and then 3 1/4th we'll play for the rest of our lives. >> no. >> rates should be higher. >> it's been a part of the real world. >> if you look at employment have you looked at it? >> occasionally. >> it's okay it's okay. it's great that people make more

money. people should make more money in this country. >> wow you're talking about a swing -- the pendulum swung so far to capital. you don't mind if it comes back. with the expense of capital. >> yeah. i think it's ridiculous how little the working person makes in this country and how much the executives make. >> we get it up close now, at least in the annual reports where the ceos pay versus the average worker interesting numbers. >> it's painful. >> i met with waste management on friday. i'm glad they gave their drivers $2,000 more. people don't make a lot of money. >> no. >> i'm not bleeding heart. because my position is the same pretty much as saying dan d'amico is a great trade advisor to the president let the working person make a little bit more. the chinese have to stop taking our jobs away. but i like the working person to

make more. >> we're going to talk again about what happens when automation starts doing the same thing. >> that's a big problem. you know, you train people to be drivers and we take that job away i don't know what will occur but there's great bottle necks where they're looking for a lot of workers if you want to go down there i'm concerned. i'm concerned about tariffs. not from the point of view it's bad for the country. for the point of view you have to accept the fact that the stock market. >> the willingness to have shared sacrifice we don't have in this country. >> no, we don't. >> that's a larger issue for a different discussion i got to do xerox. i did it on friday of course, stock was up over 4%. this on my report there was the resumption or at least some attempts being made at talks between fuji and zero rocks to renegotiate that transaction i wanted to come back to it because i misquoted fuji's lawyer in court on friday. when the transfer came out that

was made clear many people tell me it was implied the renegotiation. separately i can tell you it was confirmed by people close to the situation two companies are engaged in the talks, perhaps, coming to no end bull we'll see but to be fair to eric goldman, fuji's attorney, i wanted to share what he did actually say it was not, as i quoted him as having said there was a renegotiation underway in fact, he said, "it would appear from the scope of the allegations and the depositions and otherwise there are claims or efforts being made to negotiate with us again. i wanted to make that clear. i'm sure he got a lot of heat from his clients we'll see what happens on xerox. shire is another name we haven't heard anything from them this morning interesti interesting tekada raised the bid. ten year drawn conclusion there? >> no. >> have i talked to a couple of

large holders who said we don't mind as much as you think we might mind taking all the shares let's keep an eye on that. it may be that shareholders there, jim, as similar in almost the case to newell saying they've had enough these guys got too big they took on too much. let's just move on we'll even take this japanese company's paper. 47 british pound well, figure it out. the agr. not clear if there's another bidder there but interesting we haven't heard anything from shire in terms of rejection to that fourth offer from takeda. >> getting aggressive. >> yeah. they are. >> i want to see what sara said in the interview. >> that's right. >> keep an eye on the shares, by the way, and volume. that's been a concern, of course liquidity getting a stock that

doesn't trade. flow back issues, as we say. and how badly it's performing and how it will perform. >> dow up about 48 points to start the week we'll get to bob. >> we're up a little bit of a reversal in terms of the sector of leadership. let's take a look at the sector. remember what powered us forward in the month of april. it's been energy and materials it's been a commodity play that's reversing a little today. obviously the aluminium stocks are affecting the materials. banks are up and interest rates are a big topic. remember this story, though, i wanted to show you how we were at the close on friday it was about commodities sort of moving the markets so energy and materials were the big movers banks were basically glad. trying to figure out how much was real and semiconductors and consumer staples were the problem on the month. consumer staples are a big issue. we saw today kimberly clark report a number.

they did affirm their earnings sizes. we see it's up a little bit there. but by and large these are sitting at 52-week lows. friday was a miserable day for them you can take look now at the inflation comments i think the important thing is sounding the same thing with kimberly clark as you heard from proctor and gamble margins were impacted by significant commodity and inflation. proctor and gamble said the same thing the other thing. higher commodity costs reduce core earnings per share growth by about five percentage points. they move down to new lows this is one of the many, many problems that the consumer is having there are many worries out there for them other than the waning influence of the brand names we've been seeing no pricing control heavy competition is out there sim margins and now hearing about commodity inflation. that's not necessarily new we've been hearing about that for several quarters already you see the lit any of issues. in terms of the ten-year yield, yes, we're moving toward 3%.

this has been a slow path here in january we were 2.5 then 2.9. wage inflation became the issue on the jobs report we were emotionally ready to go to 3%. it didn't happen essentially we're back knocking at the door. it's been awhile so people had time to get used to. the banks have been fluttering since jpmorgan began their earnings report. and the same thing today we're still basically flat since the earnings season began for that i think the key point you can raise rates, if you don't -- the grade of overall growth is bigger than that, then you're going to be all right. it's not like we haven't reacted. the market is clearly reacted to higher rates look at the interest rate sectors like tell com and utilities. they underperformed the most along with consumer staple stocks for the fundamental

reasons. so markets already making those mental adjustments it's been debated how much real growth will we get on the year if we get enough of it to overcome the rate hike, i think the market will be fine. the dow is up 26 points. >> bob, thank you. we're pleased to welcome back rick santelli from a break man, we missed you. >> i'll tell you what, i'm glad the market kind of paused because, indeed, the talk is yield curve even the 10-year note we'll get to those in a second i would like to start at the 2-year hovering at the highest yields going back to the summer of 201201 2018 -- 2008 we talked about this before. it has been a steady appreciation of rates while the fed seems to be hand and hand with the prospect of that. we'll have to take it at a time. we'll go back to the 10-year here is what i was referring to. you see the one week chart of

10 we settled at 296 on friday. you open the chart up february 1st, 2018. the first time we traded above that early established high yield. and bob was right. beginning of the year we came out rocketing with respect it cooled down and we congested in the 280 we veered a little bit below that but here is the key, folks, let's go back to the end of 2016 you see right there in march of 2017 that little spike that was the high yield for 2017 263. why do i allude to that? because it's difficult to say we're not going to test 3% i might have said that, though if we would have taken out 2017 high we didn't. not even close here we are climbing again of course, we know christmas eve 2013 is the last time we settled at 3% handled. we have two sides.

tomorrow is $32 billion. it's going to catch the markets. it's not only the u.s. it's global but on the long end, more than the short end. because of our central bank. year to date of booms. they're higher but they're not at the high of the year. it's something to pay attention to if you open a chart to 20 years, you won't find a higher level than when we traded on friday. 287 basis points we haven't had that since 1989 so it's been awhile. we want to continue to watch that along with the fact that the short end of many of these european curves is not cooperating. boy, if we have a recession, what are they going to do? they won't even warm up to the notion that the rates are still negative they have no rate insurance. finally the dollar index a year to date chart had a nice run. it followed rates up for a change last week the problem is because it sits at 90 3/4.

you have to remember, at the end of last year 9212. back to you. >> good to have you back, rick rick santelli in chicago watching fixed income for us and more when we come back, the former president of mexico will join us didn't pull any punches when it comes to nafta and the trump trade agenda dow's gains are quickly fading four days in a row the dow closes negative today. back in a minute

the digital divide is splitting this country. we have parents who are trying to get their kids off of too much social media and computers, and then we have parents who would only hope their children have access. middle school is a really key transition point, right. the stakes start changing. students begin to really start thinking about their futures. what i like about verizon's approach is that it's not limited to just giving kids new tools, it's really about empowering educators to teach in different ways, and exposing kids to more active forms of learning. giving technology is not a total solution. teaching technology, now that is.

jeff bezos letting the world know about his vacation on his twitter page he posted video of himself dogsledding north of the arctic circle in norway it was bezos way of celebrating either day pretty cool video. doesn't tweet a lot. so it's interesting the things he chooses to tweet about. >> that's cool >> remember that last one he was up in the windmill, right up at the top. yeah, he has an interesting life thanks, jeff >> you sound jealous >> i am jealous. >> why are you jealous of him?

>> you have so much. >> i do feel lucky i have to remember that. thank you for reminding me, although that looked cool. >> #blessed. >> 100 million close friends >> yes >> the dow has gone negative we'll get stop trade with jim in a minute don't go away.

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♪ time for jim and stop trading. >> look, some very good upgrade by goldman sachs today on merck. some 25% up side really good animal health business that's been a fantastic business vaccines, 18 times earnings. substantial up side here with a very low risk situation because in the end, keytruda could be a $16 billion market by 2025 i think they're being conservative because this is the next big anti-cancer drug. >> speaking of animal health, henry shine. you saw that deal. >> dental. make it a pure play. that was very good

dental is struggling, but i just talked to merck. bristol-myers fell much more than merck gained on -- and i just think that was wrong so we're rectsifying the situation. >> what's tonight? >> i knew people who were selling hasbro are going to look like idiots. told you it was going to be a bad quarter. a bad quarter should not produce down side. i'm thrill forward him he was very much on point to say this was going to be a very tough quarter. i love a guy like that who says that he underpromised and that was good >> did he overdeliver, though? >> well, given what happened, it's hard to deliver at all. but he -- think about how bad mattel has done versus hasbro. and that's just because -- who is better? mattel has had a lot of ceos >> four in four years. >> that's like the browns. the browns have more consistency, right >> cleveland browns more consistency? if they take barkley

>> no way they're taking barkley. >> they'll do that just to spite the giants because then they have a rebuilding for the next three years. >> you'll have alphabet to work with and a whole lot more. >> let's get these stocks to come down a little more. we don't want any surprises. when we come back, sara's exclusive with kuroda. i am an independent financial advisor. i left a traditional brokerage firm because i wanted to be free of their constraints. at my firm, i act in the best interests of my clients. i can tell them i'm supported by one of the world's strongest, most admired financial firms.

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welcome back to "squawk on the street." i'm carl quintanilla with sarah eisner and david faber the market trying to hang on to some mild gains. diana olick, good morning. >> existing home sales in march up 1.1% to a seasonally adjusted annualized rate of 5.6 million units. that's a beat. the street was looking for a slight drop. sales down 1.2% year over year the bounceback in the northeast and midwest where weather had been keeping sales lower they bounced back significant. sales down in the west, 3.1% the big story is always prices median existing price, $250,000,

$400,000 that's up 5.8% year over year and the 73rd straight month of price gains. why? because there's nothing for sale inventory, 1.67 million units. that is down 7.2% year over year to just a 3.6-month supply of homes for sale six months is considered a balanced market. a lot of new listings are coming on and demand is so strong they're flying off the shelves first time buyers struggling at just 30% of the market we talked to realtors. it's all about prices and inventory. first-time buyers trying to get in but struggling, and now we have rising interest rates we'll be watching that this week, of course, on top of those high prices. back to you guys. >> a lot of those dynamics are hard to shape. road map starts with earnings season kicking into very high gear more than one-third of the s&p and a dozen dow components set to report this week. >> plus our exclusive interview with the governor of the bank of japan. what he told us about the state

of the economy, trade and much more >> and toymakers in trouble. hasbro reports a big miss blaming toys "r" us for its plunging sales we'll give you the details and the ten-year yield at 3% a lot of hammering around the world about global central banks raise interesting rates. as economies start to improve. europe's mario drag hi but the third most important central banker in the world still firmly in stimulus mode. bank of japan governor kuroda making that very clear in an interview this weekend listen >> the economy is doing quite well on the other hand, prices, although rising steadily but still, consumer price inflation rate, excluding fresh food is only about 1%. >> right >> and if you exclude energy

items, then inflation is only about 0.5% so there's still a long way to go to achieve the 2% inflation >> do you have confidence that you're going to get there? >> yeah, but in order to reach 2% inflation target, i think it must continue. very strong accommodative monetary policy for some time. according to the latest forecast of the policy board, it's around fiscal 2019. so maybe one to two years time but this is only forecast. and still board members think that there is down side risk bigger than up side risk so risks are skewed to the down

side >> central banker talking about not being anywhere close to meeting his inflation target very strong accommodative policy needed in japan. it's quite a statement we'll have a lot more from the interview including his thoughts on rising protectionism and what a trade war can do to the global economy and shockingly, guys, i asked him about the japanese yen as well. >> can't imagine why is this just about demographics being incredibly hard black hole from which to escape >> in japan, yeah. they have -- there's two things going on they have the tough demographics, also very high debt levels which we talked about. the highest debt to gdp among major economies and they're just starting to get off of what has been a decade of no growth and deflation. and it's working, their policies so he's not ready to call it quits any time soon. and that's an interesting statement given europe is starting to look for the exits and the u.s. is starting to normalize. people are going at different

speeds they're still firmly in party mode in bank of japan. >> and i assume we'll get to trade and north korea and a lot more later this morning? >> yes and global economy and whether this is peak growth which was one of the biggest topics of discussion last week different views on that but he shares some candid thoughts. >> big interview got a lot of notice over the weekend with rates and earnings in focus today let's bring in credit suisse chief equity strategist jonathan golam and yuri antimer you've been constructive as we've gotten this earnings season under way are you surprised we haven't gotten more pop out of the prints or was that all priced in going in >> the surprise perhaps was around the banks where they beat their numbers in meaningful fashion but it was all off trading activity on the spike in vol in february and march and anyone looking tat is saying, what's the ability to continue to have those trading -- that set of activity as we have moved through the year probably not

so they didn't respond that well but the overall earnings picture is unbelievable. this week is going to be big because this is tech week with amazon and -- >> microsoft, everything >> microsoft and the like. so it's going to really set a tone because that group has been under so much focus. >> the reaction to banks and trading revenue changes. >> well, the banks in the financials obviously highly correlated with interest rates and they are rising and that's generally a bullish thing for that sector. so i think that's sector still has appeal but as jonathan said, overall as bullish as the market was on q1 earnings pricing in 17% year-over-year change for the last 10 or 12 weeks, amazingly stable progression of earnings estimates from the other consensus. those numbers weren't bullish enough 18.7% is where the number is now after one week of earnings

reporting and so really an amazingly bullish story which is very important because the market is in digestion mode. the market has a p/e that two months ago was too high and needs to grow out of that. and what better way to do that with almost 20% earnings growth. so it's a very good thing and the market would look a lot different if they didn't have that backdrop. >> on the other hand, the ten-year yield is inching closer to that psychologically key 3% level. does that take some of the enthusiasm out of what you're expect chicago is good earnings? >> we've done some work that if there's a tipping point it's probably around 3.5% and the big benefit here would be the financials more than any other sector but if you look year to date at the horrible returns in the bond proxy groups and in state -- >> consumer staples down 11% this year. >> horrible. >> even if you look at reits are just a mess. and so when you have rates move

up, we're talking about almost 60 basis points year to date there's a big twist in which the winners and losers are within equities rather than -- >> you say 3.5% tipping point. can you explain what that looks like what's the tipping point mean? >> we looked at, you know, over the last year or on a rolling baseis what is the market's response on days where rates rise versus days where rates fall. you get a much better response if today -- if rates are up two or three basis points, better than likely you'll have an up market if rates come down at the end of the day, while it doesn't feel that way, anybody can look at our research on it it's pretty clear. that actually starts to shift, and as you go past this precipice around 3.5, it looks like it actually -- the market starts to sell off so better interest rates are a sign of health but too good is a sign of a head wind and that's

where we think the balance is and that's what the math tells you. >> the journal takes a crack at liquidity. looking at low equity volume, treasury over supply they argue etfs are stealing shares from the options market do you believe it? and how dangerous is it? >> i'm not too concerned about that kind of liquidity because the fundamentals may create more volatility over the near term if you have strong moves looike we saw in late january and february the fundamentals tend to win out. i'm more concerned about the other liquidity. general financial conditions or liquidity conditions in the market because market prices and valuations are driven by earnings and liquidity and in a bull market you have ample liquidity and strong earnings price goes way up. valuations expand. in a bear market, the opposite usually financial conditions are tightening and p/es contract and bringing prices with it.

we're in that twilight zone where earnings are super strong but financial conditions are tightening as johnson said, a three handle on tens is pretty plausible in the next few days or weeks if you're looking at what the fed is pricing in, if that number is reasonably correct, i don't see the ten-year much above 3.1, 3.2, and i think that's a fairly benign outcome still the psychological importance of a 3% -- you know, aside from that, because i do think it will bring buyers in either because of the spreads against other countries sovereign debt or just investors who want that yield and see a three handle and say i'll take some of that >> one final point that's a common view today that not only will it draw in buyers but the fed has their eye on it, too. and they're not going to let it flip too violently >> in the last couple of days, the yield curve -- go ahead. >> no go ahead

>> the last couple of days you had the yield curve steepen out. it's amazing how quickly the discussion of this changes but, yes, if the curve flattens out, i think the fed will be very skittish to push hard or this. so while the market is expecting four and that's probably reasonable expectation, if the fed moves and the market gets indigestion over this and the curve flattens out, we'd all expect them to back away quickly. >> guys, good to see you both. see you soon, i hope jonathan and jur ri en when we come back, alphabet getting ready to report earnings as the busiest week of earnings season kicks off where to put your money to work in technology coming up next plus, canceling flights. southwest planes sidelined for emergency engine inspections after last week's deadly accident we've got some new details for you on that. "squawk on the street" will be right back the dow up about 10 points here. how do you gauge the greatness of an suv?

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you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that. let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. shares of apple slightly higher after sliding into negative territory as you may know for the year on friday. keeping our eye on fang as well today, alf dlat bet repophabet y after the bell walter is research analyst at btig good to see you guys >> hey, carl >> walt, let's tackle apple first here i wonder how much you are buying

into some of the negative sentiment around some of these sell side notes we got last week >> this is the time for that it seems it's every quarter is, you know, you get people more focused on the guidance for next quarter. last quarter we went in with a consensus estimate for the march quarter that they're about to report at like $68 billion and that's come all the way back to $60 billion. you'd think with that much of a revision down the stock would have gotten killed it's down 1% since the night before they reported last quarter and the market has been down 1%. this is just one of the things that when you're an apple analyst you have to deal with from quarter to quarter. frankly, the consensus swings back and forth and maybe people have gotten a little too pessimistic as far as the next couple of quarters here. >> do you think the idea, the notion of a chinese boycott, though, does that pose anything novel this time? >> i mean, that would certainly be new, right? china is a very big market but

apple's problems or the headwinds they face are much broader than china the upgrade rates are the lowest they've been people are holding on to their phones longer than ever. the question is, is it going to trough this year and just trough, not going down, not elongating, is going to be a positive for them in terms of stabilizing where unigrowth can be and maybe you have an inflection up at some point with these new products that are going to come out. >> rob, you don't cover apple. you cover facebook, amazon, netflix, google. there's an interesting piece in barron's about the difference between apple and facebook and their business models and their approach to privacy and all of that which generally may not be something that investors pay attention to but right now, with the scrutiny from capitol hill and from european regulators, it feels like more and more, investors need to understand the differences in the business models and how vulnerable those social media companies tor regulation what your expecting to learn this season? >> yeah, i think we've been deep

in that over the past several weeks and months in terms of investors heightened awareness to the sensitivities around data and the use of data. that's not something that's -- while it's very much common to the investor focus surface over the past few weeks it's been ongoing for about a year or so i expect we'll hear more there's been a lot of testimony, a lot of management presentation in front of congress, in front of the media through the quarter. they'll expand on what they've been saying in terms of the seriousness of their practices and their auditing and the reporting of potential values. and they're likely to be conservative in terms of giving a message for consumers to expect heightened spending around some of these initiatives. so they're going to set a very stern and serious tone around the data use issues for sure >> rob, your universe, it's been

amazing week alphabet tonight wednesday, twitter facebook is in there as well amazon thursday. of those big four reports, what do you think may be the most explosive and why? >> of those four, i would point to twitter just as the business has been rebounding and recovering, i don't think the sell side consensus in terms of modeling has not caught up to the slope of the recovery. a lot more of, i think, a riskier bet given the range of outcomes the others are very stable in terms of predictability. but that's the one that i think has the most potential upside going into earnings season for this week at least >> hey, walt, as a telecom annualist who follows apple as well, you mentioned this, but do you have any hard date on how long people are keeping their iphones past when the equipment installment plan is up and, therefore, the cycle has elongated? >> they report the upgrade rate. it's just an inverse of that you are on multiple years and

operators have been reporting this upgrade rate in the united states for some time so these upgrade rates which are really helping the cash profitability of the companies are as low as they've ever been. that implies that customers are holding onto their phones as long as they ever have but the question then is, is this year the year where they just stop going down and that, i think, is a function maybe of competition, david. there's not a lot of promotions in the market, right sprint/t-mobile as a merger hasn't happened and that should have a more competitive mark eand that hasn't been the case price increases. not offering as much in terms of trade-in values. it's just -- the competition in the market has waned upgrades the lowest it's ever been and the ebitda margins of verizon, 55%, they're generating tons of free cash flow on what's to be a competitive business >> so you think the justice department is right to look into collusion between at&t and

verizon? >> the question is, is that the function of what's creating a not competitive market i'm not sure that's the case you can still switch from one carrier to the next without worrying about your phone being locked or not. t-mobile will buy out your phone if you need to and put you on a new payment plan i'm not sure that latest doj effort in terms of of that collusion is really the issue as far as the competitive environment in the u.s. right now. you need the cable guys to put an offer in the market that people are going to be attracted to or maybe apple with the esim, trying to enable themselves or google or others to come up with a new service and become a service provider themselves in what is a market that generates a lot of free cash amazon goes after markets with very low margins here's a wireless industry where the ebitda margins are 55% huge free cash flow. why wouldn't companies like that think about going into this market, especially as we convert over to 5j >> that would make it interesting. that's for sure, guys.

shorter term, it's going to be a heck of a week on the earnings front. we appreciate you helping us set up for it. rob and walter we'll see you soon >> thanks. it is one of the year's most popular events for fund managers the sohn investment conference it's getting under way here in new york a bit up town from here. leslie picker joins us with more on the day's activities. leslie >> hey david you can see the popularity behind me. we're in our first break from the next wave presentations. these are from up and coming fund managers presenting their ideas. and interestingly, the first two presentations of the day centered around long picks in the european internet sector starting with dylan adelman, last year's contest winner he posted a long in vostok new ventures the best way to play a company called avito which is a european

version of craigslist with online classified ads. after him was alexander captain. he pitched a company called takeaway.com which is an amster gam company similar to a grubhub here the delivery market in europe, the online food delivery market in europe is a big -- a big market one that could increase tenfold over the next ten years. after him, the third presentation was tim garry he did not provide a specific pick but he did provide a bunch of explanations as to why the market structure was such that it could predict the impending crash of growth stocks a lot of interesting stuff we'll be doing continuous coverage here all day on cnbc with luminaries. you've got some big interviews coming up, david lots more from the sohn event to

come throughout the day. >> -- investment ideas, leslie thank you. as leslie said, we'll have a lot more from the sohn conference later today. i'll be speaking with glenview captain's la capital's larry robins about his larger view of health care so tune in for that. >> sounds good as we head to break here, look at shares of hasbro the toymaker out with quarterly numbers, missing on the top and bottom lines hasbro says its results were impacted by the bankruptcy of toys "r" us. and speaking of, later on "squawk alley," we'll talk to the former ceo of toys "r" us, gerry storch "squawk on the street" will be right back

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play [music plays]his". when everything's connected, it's simple. easy. awesome. time for our etf spotlight mike santoli is looking at consumer staples the worst performing sector for the year kimberly-clark out this morning which was actually a little better, but no breadth here. >> they matched the earnings forecast from a month ago.

it's a similar story as you know it's basically weak organic growth very tough to grow the top line. cost challenges, commodity costs squeeze and all the rest of it very little pricing power on the other end. this is what investors have been fixated on for some time look at the performance of the xlp, the consumer staples etf. down almost 12% year to date also the kxi in there which is a global version of that it's basically the global conversion staple. you see it's outperformed the u.s. version but it's probably mostly a u.s. dollar effect kind of translating back the stock price performance into dollars nonetheless, it's obviously been kind of -- a few things to take note of. the stocks are down a lot on a one-year basis but not necessarily all that cheap if you look at them on a forward p/e basis. there's a little less yield support as bond yields have gone up most of the big u.s. guys are yielding close to 4% many of them

but yet not necessarily able to kind of entice that many buyers here when you have bond yields higher also the consumer staples sector is down to 7% of the s&p 500 it was 10% in 2015 it was 15% 25 years ago. so this is kind of a secular move we've seen. the question now is whether you are seeing some kind of capitulation because i do think the street has given up on them and they no longer have that calling card of this is a defensive group. >> they were appealing because of -- they paid high dividends in a low rate environment. often targeted by activists and m&a and it kept the group hot. p&g received a number of downgrades after last week's quarter and after that merck deal >> p&g, only about one-third of the analysts that cover it are recommending it. less than that for kimberly-clark clearly the street has been disaffected by this move and that raises the question of, you know, are they so far out of

favor that some kind boftof bottoming can happen here. the value investors aren't yet being drawn to it. >> they've got to click with millennials, right it's still sort of old school big brands that our parents used to have. cereal >> easier said than done >> after what happened to tobacco on friday. >> thanks, mike. >> look to me with the cereal. >> consumer staple >> i thought you knew i had all this cereal at home. >> i eat cereal, too >> worked for seinfeld >> what's wrong with cereal? we are focused on newell this morning it started up. this on news of a settlement in what, well, some of us were looking forward to a heated battle between carl icahn and starboard's jeff smith. it kind of happened, but they reached a settlement which is most likely for the good of the company and its shareholders we spoke to jeff smith last week

about the prospects of a settlement here's what he had to say. >> in terms of a settlement, if we were to do that, it's really both you need it with the company and icahn because he has an agreement. >> right >> but as we talked about before, that means it's just with icahn because he's pretty much if not controlling, heavily influencing the company which is what makes everybody uncomfortable. >> that made mr. smith uncomfortable. he'd been recommending four directors for the board. icahn got five appointed almost immediately. showing up with 5% of the stock. that gave mr. smith some pause the two were potentially at each other but reached a settlement under which lopez, steele and bridget ryan burman who will be agreed on by both sides, has been agreed on will join and stepping down are two of or stepping down officially is one of icahn's board members and

another one won't go on the board. that was david atchison who is carl icahn's son's friend from college. he'll not stand for election all of this putting the pressure on mike polk, the embattled ceo of newell after they had a series of poor quarters following its acquisition of jarden and fight with martin franklin on the board who sold jarden to newell he was initially aligned with starboard smith and stepped off entirely once icahn got his directors on but polk has got pressure on him now to perform and people close to the company tell me he's well aware of that. the question will be, can he make it work six directors of those on the board who are going to be putting pressure on him from mr. icahn and mr. smith. carl >> we know you'll watch it for us let's get to sue herera for an update at hq. >> good morning, everybody here's what's happening at this hour southwest airlines has canceled

117 flights today. that's according to flight aware. and that is 2% of its daily schedule the carrier canceled nearly 50 flights yesterday. southwest inspecting the engines following last week's mid-air explosion that killed a passenger. gasoline prices are on the rise the average price for a gallon of regular is now $2.83. up 9 cents over the past two weeks. that is 37 cents higher than a year ago paramount's "a quiet place" took the top spot in its third weekend at the box paucoffice it brought total domestic gross to $132 million, according to comscore if you're looking for a summer internship, listen up harley davidson will pay eight inteerns to spend the summer touring the country on a harley sharing their advantages on social media and the best part, but at the end of the summer, the interns get to keep the motorcycle how about that

it is the latest attempt to lure in the millennials and the younger riders sara, back to you. >> that's pretty cool. as far as internships go >> we do not do that at cnbc >> we do things to -- >> memories. experience and memories. >> a chance to work at the forefront of financial journali journalism >> we do tend to hire a lot of interns. see you next hour. more from the exclusive interview with bank of japan governor kuroda. what he told us about the state of the global economy. is it peaking? the threat of protectionist policies on growth and a wleho lot more "squawk on the street" will be right back

welcome back to "squawk on the street."

i'm sarah eisner with carl quintanilla and david faber. goldman sachs takes about 15 points off the dow s&p 500 hanging into the green just barely and the nasdaq is up a little more than 0.1%. bank of japan governor kuroda sitting down for an exclusive interview this weekend we discussed trade, tpp, the japanese yen but we started on where he sees the state of the global economy right now. listen >> we continue to grow at a relatively high pace, but as i said on a number of potential risks. one of them is, of course, protectionism. another is unexpectedly rapid tightening of monetary conditions in some countries and various geopolitical risks

in north korea or in the middle ea east so there are several down side risks faced by the world economy, but i hope none of them actually realize affecting the world economy in the next two years. >> broadly what we're seeing globally is strength synchronized economic recovery the best we've seen in years one thing, though, investors are wondering, is this the peak? is this as good as it gets where everybody is growing together? what do you think? >> i think two things. one, there is no predetermined kind of cycle in the economy and second, this time, we are still in the aftermath of the global

financial crisis started in 2008. so the huge crisis and negative growth and from that point, we have been recovering so naturally, recovery phase tend to be longer than usual and at this stage, we don't see any imminent sort of turning point. as you know, i recently released a world economic outlook -- >> this year and next. >> so economic -- world economic growth is likely to accelerate and maintain a high rate of growth over the next year. so, of course, you cannot expect a ton of expansion, but for the time being, this year, next year, we don't see any sign of

turning point. >> there is increased protectionist rhetoric from many places >> yeah, yeah. >> how big of a risk is this for japan and for gloatibal growth >> at this stage, this is the biggest risk faced by the world economy. of course, as far as the japanese economy is concerned, at this stage, we are not much affected, but this kind of protectionist or inward looking economic policies emanating from one -- that would be very dangerous, damaging to the world economy. so we have to look at it but on the other hand, all countries that are developing, they do understand the great contribution of free trade

so i really don't think the total trade war would spread all over the world and the world trade goes down and the world economy -- i don't think something like that would happen. or i should say hope never happen >> when it comes to trade, this week your prime minister was visiting president trump it looks like they're going to go the route of a bilateral trade agreement inted stead of joining the tpp. were you disappointed in hearing that >> i'm not that involved in the summit meeting between japan and the united states, but as far as i know from the japanese side, i think japan continues to look at bilateral solutions and continue

to advocate tpp. tpp, excluding the u.s., is agreed, but japan very much wish u.s. join or rejoin tpp. and i think that is still priority of the japanese government >> it is interesting that during periods of volatility and rising fears of trade wars, the money goes into the japanese yen >> what do you call safe haven currency >> safe haven currency and then on the other hand, your policy weakens the yen i wonder if this is a president, president trump, that has tweeted before about currency manipulation and devaluation do you worry about being on the other side of that tweet >> you see, i don't think japan is intentionally depreciating the currency if anything, japanese yen from time to time appreciate too

much so i don't think japan is manipulating the currency in order to get the export advantage. no, i don't think so >> our thanks to bank of japan governor kuroda. he was very open with the fact they'll continue their easy stimulative policy pretty open with the fact that japan wants a multilateral solution and is going to continue to try to convince president trump to join tpp instead of go about it in a two-way street which is what the administration seems to favor. and as far as the yen, he was saying sometimes it appreciates too much and he doesn't really understand why it's this sort of beacon of safe haven flight during times of volatility we talk a lot more about some of the recent stock market moves and why he thinks we've seen increased volatility and the prospect of a debt crisis in japan, something many investors have thought for years i'll have that for you on "power lunch" a little bit later.

>> a lot responding to the five-year thing. >> five-year -- >> plan? >> he's confident they'll figure out and hit that inflation target within five years they're about half of where they need to be to 2% >> watching that, along with the peso today, the president tweets mexico, whose laws on immigration are very tough, must stop people from going through mexico and into the u.s. we may make this a condition of the new nafta agreement. our country cannot accept what is happening also we must get wall funding fast so on that, we're going to get some reaction from the former president of mexico, vicente fox. going to joino us on "squawk on the streetin" a few minutes dow is down 46 your company is constantly evolving. and the decisions you make have far reaching implications. the right relationship with a corporate bank who understands your industry and your world can help you make well informed choices and stay ahead of opportunities. pnc brings you the resources of one of the

nation's largest banks, and a local approach with a focus on customized insights. so you and your company are ready for today.

a huge week for tech earns azth names like alphabet and amon find out how some are trading the space.

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let's get out to the cme group in chicago and check in with rick santelli >> hi, carl. if you are a person that's paying attention, not only to the economy and all the underlying issues that give the economy more horsepower, more energy, a bigger thrust towards 3, maybe 3.5% quarters back-to-back to back of gdp, you're paying very close attention to the following looking at intraday of ten-year note yields. we came within a whisker intraday of touching 3%. we've had an intraday 3% in early 2014 but, really, the last time we officially closed, and you know i pay attention to closes the most, above 3% was one day let's goat t to the board. that one day was new year's eve 2013 when we had our 3.03. you talk about a number that we've talked about a lot that you need to pay attention to

you need to see the bigger picture. a couple things need to jump out at you this double bottom, historic double bottom. historic yields. each under 140 in july of '12 and '16 that sets the table. you can clearly see that 3%, other than that, you'd have to go all the way back into 2011 to really see some activity above 3% and, of course, what i want to talk about is how the market has been acting lately 263, the 2017 high can't stress how important that is because we did have a retracement. do you recall we had 22 sessions when we were closing in the 280s then what happened we fell out of it. how far did we fall out? only traded in the low 270s in early april on a closing basis didn't really come anywhere near that 263 to me, that's the defining moment there's only one of two things can happen at this point either we're going to take this out and that makes sense so any kind of a close daily, very important.

weekly super important, above 3.03. we'll see a different market but technical analysis is as much art as science. you could see this thing back down and we could stretch out a channel. you know how much the 10-year likes a channel. the reason i'm not betting on that, though, personally, is because i think if you look at last week's rise in rates, i can't point to anything that really filtered in yeah, decent retail sales. we had some good numbers but nothing used the point of the matter is we have two year supply, $32 billion. 5s and 7s. supply the fact the economy looked like it was backing off and didn't do it in a huge way all this is lining up for this pressure cooker. do we take out 3%? the market only knows for sure my bet, since we held 263 i'd say thumbs up. now let's start counting the days or the hours. maybe it will be today that it happens. david, back to you >> okay. thank you, rick. rick santelli. it's time to suspected it over to jon fortt with a look at

what's coming up on "squawk alley. jon? >> david, allah bet, google's parent, reports after the bell number of changes to how it reports numbers. plus, apple has lost all its gains for the year 'll hat's next for big the years wediscuss it, coming up on "squawk alley. nobody's putting their money into equities. they're not investing in commodities or fixed income. what people areally putting their money into is what they hope to get out of life. but helping them get there requires a real refusal to settle for average. because when you approach investing with a tireless desire to beat the status quo, something wonderful can happen. those people might just get what they wanted out of life. or maybe even more.

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welcome back to "squawk on the street." i'm dominic chu. stocks are still trading in negative territory to start the week at least for now, with energy the leading sector to the downside iran cast some doubt on extending limits from opec conocophillips and noble energy all off. sarah, back over to you. >> dom, thank you. southwest canceling 117 flights today, more than 2% of its daily schedule, on top of the nearly 50 flights the carrier canceled yesterday southwest is inspecting engines following last week's explosion that killed a passenger. they say this is part of an

accelerated inspection program they said it's not the result of an airworthiness directive handed down by the faa on friday southwest says we have minimized flight disruptions still they are taking a close look inside their fleet and those engines. hasbro making a fairly significant turnaround today, set to open deeply in the red, got down to 79 currently up 2%. reported a big miss on top and bottom lines, impacted by the bankruptcy you of toys "r" us, of course. this is what cramer had to say in the last hour >> the ceo told everyone, he went over and over again, warning you about toys "r" us. and there's still people would were shocked and felt that this was something you should buy ahead? i mean, honestly how stupid can people be

>> so that dip below 80 was fairly significant but managing to hold now closer to 85. he was right when he said the company was very upfront about the troubles they expected to face as a result of these supply chain disruptions. >> jim was right about the movement in the stock prices, up 2% we'll see what he has to say when he joins jim on "mad money" tonight. >> with the ceo out, four ceo's in as many years a lot of people are focused on m&a, the maker of barbie >> he has a background in media and filmed entertainment the question is do they move more aggressively into that. no shortage of potential interest in mattel, even from hasbro previously, at a price. always questions about antitrust as there were two years ago when it was mattel that was far larger but they didn't get anywhere the last time they tried to

negotiate that deal. we'll see what happens to mattel as they both suffer a bit from the loss of toys "r" us. >> we're just starting to get into the toy thing, teething toys right now >> the shares lost in sporting goods from sports authority, now in toys from toys "r" us series has been giving appliance share to all different kinds of retailers. dow is down 20% or so. when we come back, former mexico president vicente fox

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rhode island "squawk alley" is live ♪ good monday morning, welcome to "squawk alley." joining us this morning from one market in san francisco is recode's executive editor kara swisher. good to see you, kara. the stock to watch tonight is going to be alphabet the parent company of google is set to announce first quarter earnings after the close, as data privacy of course has taken center stage in recent weeks, kara i wonder if you think, whether it's alphabet tonight or facebook later in the week, twitter, whatever, if this