didn't potentially infect anything my guess it will be back a final check on the markets this morning the futures have been higher all morning long you're going to see they're up from where we started this morning. so dow futures up now by 140 points mcdonalds a big reason they'll talk about that on "squawk on the street" in a moment thank you for joining us today we'll be back. >> make sure you join us "squawk on the street" begins right now. everything i do leading is for my customers and employees it's just small noise from an amateur twitter guy that should stay in the shallow end of the pool he shouldn't play with the big boys i take nothing personally. bring it on. >> when you are fighting somebody like him, you need to go down to his level that's the only way he'll understand and they've gone from trash

talk to a $26 billion deal the ceos of t-mobile and sprint will join us on a big day for global m & a welcome to "squawk on the street" i'm carl quintanilla with jim cramer. we'll talk to goldman's david solomon later on this morning. there was a very nice bounce for personal spending in march and more macro data on the way the top story t-mobile is buying sprint in a $26 billion all stock deal the deal would unit the third and fourth largest u.s. wireless carriers we'll talk to legere and claure on a hundred billion dollar day. >> it's breathtaking because we've got telco and refining and distribution centers and timeshares it seems like a lot of companies

realize we're not doing so well. let's take out competitors and grow let's save a lot of money. obviously t-mobile/sprint. i think i agree with david 55% chance of it getting done. over the weekend i thought it was zero i went to work on the deal like david told me to i've come around to his view. >> david, walk us through some of that calculus today. >> yeah. listen, you know, we've talked about it on the set, carl, as you know we've had conversations about the most important bill that consumers pay is their wireless bill it's no doubt it will come under scrutiny and there will be key questions whether or not it's beneficial to consumers. or harm consumers, with whihich key of anti-trust law. whether there's harm that can be proved but the companies are out of the chute very focussed on that. making their case in terms of prices or at least trying to 5g, jobs, which they know this white house in particular is

quite focussed on. and the emerging competition from the likes of our parent company comcast. charter with their mvno, they use verizon spectrum, for example, to deliver wireless services not to mention, the competition that they will offer, namely, combined sprint and t-mobile to the cable companies in getting into the home and providing what would be a broadband product through 5g we'll see, jim i don't mean, in any way, to make light of the fact it's going to be tough for them to get by they think now is the only time they can do it they are under enormous pressure at sprint given the debt load at the company. you know that. we've watched for years. the cap x requirements from the 5g build out are beyond the wherewithal they have in terms of what they have available to spend on it. and so this is a deal that kind of has to happen for sprint in many ways. i'm not sure what the company looks like if it doesn't. >> david, one thing that is

clear, they answer a lot of objections that people are going to think of. whether it's wait a second comcast added more subscribers than t together. wait a second. we're not going to cut jobs. we didn't do it before with metro pcs. we won't do it this time if we can't spend, you wouldn't get leadership in 5g businesses and government will benefit from this and rural. if you had to guess, david, what president trump would want out of a merger. did they not check every box >> they did. and this is the new world we live in, jim we talked about this it's not necessarily, though, about what is the current laws as much as it seems to be about checking the boxes but things do end upcoming back to the law at&t/time warner versus the doj that will have concluding arguments today or the next few days eventually you have to prove it or not yes, you want to focus, as many

anti-trust experts told me the white house will be focussed on conceivably that can be helpful for your case. you have a long-term staff with the doj as was pointed out earlier on "squawk box." many were in place when they said no to at&t and t-mobile those arguments haven't changed that much. >> there's also the fascinating story of how these two came together long history of trash talking, as we said he called ledgere a con artist and he would get booted out. ledgere said i'm tired of your uncarrier b shrks. ledgere no stranger to trash talk he long time called at&t dumb and dumber tweeting as recently as this year did you try to say sprint is better than t-mobile

and mike tyson laughing. he's been using #sprintlikehell. in '17 i'm surprised anybody likes anything about sprint. so the likelihood they'll work closely together is not -- that's not going to happen. >> i will say this, that when i've tried to pin john down in a series of interviews about whether he favors mergers, the answer is he has to be open minded so he's obviously not going to merge with dumb and dumber that, i think, was a moniker he's going with. he has moderated to some degree the endless criticism of sprint. they seem, i don't know, i don't want to emphasize too much but it's kind of like they like to trash talk like the nfl. you know, there's nfl players that trash talk but then they shake hands after the game. >> they might be on the same team next year. >> exactly i think there's handshaking going on and it's like pro sports i don't think they hate each

other. i think they kind of say we're friendly rivals. come on, david it's true. >> i agree with you. i agree with you i think that's the case, as well let's not forget, jim, this is t-mobile taking over all right. deutsche telecom is going to consolidate the financial results of this company if they're approved they'll own 41%. sprint will own 27%. and the public will own 39.9%. and ledgere will run it and claure will be on the board. basically this is t-mobile and deutsche telecom's show. we know who is in charge. >> david, more to come on m & a to talk about this morning we'll get mcdonalds' results, as well the ceos of t-mobile and sprint here to discuss their $26 billion deal more "squawk on the street" in a minute ♪

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cramer joining us on set fresh from announcing the massive long talked about merger. ceo of t-mobile and ceo of sprint john legre and marcelo claure. did you see it happening >> i'll let marcelo chime in we've been thinking about this for a long time. there's been gyrations as to whether it could get through from a price or government standpoint one thing that was never confused, these two companies made sense together and the 5g aspects that are critical for the country and us was the flipping point as to this is the time and it makes great sense. >> all right marcelo, is my bill going to go up how could it not in the end, competition, free market competition brings down prices. >> ask him who his provider is his bill is going down he has the dumb and dumber. >> you never told me which was dumber. >> at&t has solidly moved into

the dumber solidly all in i mean, that egg they laid the other day. come on. >> right we've been clear in this merger what would make the merger unique is we're set to build the world's most advanced 5g network and the combination of our companies allow us to do that. we made a commitment we're going to offer the best products and services at lower prices we plan to make the market more competitive. together, you know, if you think we're disruptive together. >> can you make the promise now we'll have an average bill can you tell me now? promise us that our bill will go down 20% it. >> i wouldn't say 20%. i promise we'll have the lower prices >> why don't you consult the new ceo of the company [ laughter ] >> let's have a promise here it would be so good. right now he's tweeting about the jazz fest. right now, can you tell us the 25% decline.

>> i won't say 25% but i'll say services will be broad and prices will go down. speeds will go up. 5 g capability will be on anything that the united states has seen before. jobs will go up from day one both companies we have more people than they did the day they were separate and very importantly, jim, the uncarrier, which is a fabric that sprint gained, as well, it's the competition of the united states. this is going to super charge that what you'll get with the network is higher speeds, lower prices, and i got news for you dumb and dumber, wi-fi, and son of wi-fi, you know, our other big competitors, this is bad news for them. here is something i want to tell you. two pieces, one we want to talk to shareholders. this deal is incredible. okay so what you got is company when it comes together. revenue $75 billion. service revenue is $55 to $57 billion. 40 to 42% margins growing to 55

to 57. how about this, the company will have 2.9 times the debt leverage but it will be able to go down two turns by three to four years. and the reason is the cash flow is going to from $1 to $2 to 2022 it will be $20 billion. 2025 we'll create $25 billion. $6 billion run rate. 7% cap x $27 billion are network synergies. we know how to do that. >> david, i'll give you a chance to jump in where is he? >> here. i'm in your ear. my apologies for not being there in person. >> we've been waiting for so long do the deal for so long, and the day we do it you go to

hollywood. >> i know. i know timing is everything in life, john mine has never been particularly good yours you're hoping is good this time in terms of timing. you make a compelling case for the business perspective that $6 billion number you know how long i've been covering deals there's not many numbers i can remember being that large. back to anti-trust, to those who say i get the arguments you're making, but why change what is clearly working. i'm quoting paul allen this morning. why change what is clearly working? you helped drive down prices you forced verizon and at&t to go to unlimited. it's been working. why screw with this? >> okay. and, you know, david, this is the game that we put our helmets on to play today after we come here and meet with you guys, we meet with a couple of other shows and all leads to washington everybody has the idea to the

preconceived notion of the deal. i'll start yours, first. take that competition and super charge it. you know, put it on faster speeds, bigger scale bring lower prices take that my commitment, marcelo's commitment is if you like the competition before, you'll love what is coming with this one secondly, 5 g is coming. by the way with the hype that the united states has had around at&t and verizon, we are behind. it's the early innovation cycle of 5 g we are behind china. it's not something we can allow. this will be the first company, because of our available spectrum, 600 megahertz to build a nationwide broad coverage 5 g service. guess what ctia says that the leadership in 5 g can bring 3 million jobs, 27 5 billion investment, and $500 billion of economic value. we're behind and, by the way, what we also hope to do is get dumb and dumber and get comcast

and others to step up their investment and we expect they'll invest in extra $20 billion and we're going to invest $40 billion in the first three years. that's a story that washington wants to hear. it's about zero to one it's about jobs. this deal will get approved because it's great for the united states. >> what do we do about the idea? i think about president trump a lot of commentary, i don't agree with it, about bailing out billionaire job for these men. and, also, billion dollar german company. we have a german company that does very well john you work for a company that is your idol you don't seem it. you are. and how about the softbank isn't president trump going to say we're not going to bill out the japanese are you kidding me >> this is not about bailing out. i mean, softbank had a good relationship with the u.s. government for a long time but i think most important this

started in 2012. you've been covering this for awhile it was ambition to combine the company in 2012. we waited for the right time and the time is right now. and the main reason for it is the u.s. needs to will lead on 5g the only way is by combining sprint and t-mobile. at&t and verizon cannot do it. the way we're going build the 5g network. the amount of economic development that 5g will bring to the u.s. $500 billion you're talking about the creation of 3 million jobs tell me what else do you see today that has the ability to create 3 million jobs? there's nothing else we think it's good for america we think this is good for consumers. we made it clear we're going to lower prices best product best prices. how many mergers do you know we're making commitments we'll add tens of thousands of jobs in the first three years. it's a growth story which the

synergies more valuable than a stand alone basis. we think it's an amazing deal. >> i want to be clear. i work for "squawk on the street," you know, none of this deutsche telecom i work here. >> i forgot that a lot of times i do. you work for t-mobile but maybe i'm being dumbest. >> president trump does have some impact on this deal because tax reform has significantly increased the value of this deal tax reform is also given us the engine that we'll be able to use while we're investing to hypercharge this and i would say if you think about it in washington, leadership with china is risking taking the u.s. position in such a critical area. i think we're goal aligned from a political agenda david? >> david is at coffee break. >> marcelo, i'm here let me come to you, for a second, marcelo. this will be a long regulatory review targeting june of 2019 as

potentially getting to a close what happens between now and then we detail the competition between the two of you, the trash talking that has gone on how do you operate against the competitor while you're under this kind of regulatory review do you keep up the same level of spending, for example? you spend hundreds of millions of dollars on tv ads do you keep it up? or do you back off during the regulatory review. obviously in the hope and expectations that you're going to be one company. >> we don't back off as a matter of fact, even tomorrow we get back to competition. we'll continue to track at&t, t-mobile, and verizon customers. we're going to invest. it will be the largest investment in sprint in terms of continuing to builds our 5g network. we're competitors and continue to run the company the same way the last four years. we'll continue to compete and continue to win. and i think both companies are disrupters and, you know, we'll continue to run the company the same way we've been doing the last four

years. >> one thing is clear, david you asked before if there would be an opportunity for us to have thanksgiving dinner together this year we will. and i will throw potatoes on him. >> on that point, i want to talk about the relationship you two have had this is a sound byte of john from august 18th take a listen. >> marcelo needs to wake up and realize that the mother of all customer loads is sitting in verizon and at&t 77% of my customer ads come from those, too and i think he should focus on fixing his company and, you know, just copy, paste everything i do and you'll be fine. >> how much of that was performance? how much of that suggests that culture matches here >> i said it on the way in we have had, and we will, marcelo said, a very competitive spirit it's just who we are our companies are -- i will tell

you, worst kept secret, unfortunately, is i like the guy. i actually found out, as i said, if i was tall, young, had a billion dollars, and owned a football team, we would be the same person. but outside of those things, you know. >> all right all right. i add this when i look at this, i realize that you do check off a lot of boxes. i mean, it's very clear what you want to do is say there's no doubt about it, we're going to spend more on 5 g. we'll do more rural. you don't have to worry about that about any anti-trust. comcast adds more people than at&t i want to know where does this money get spent? companies are saying whoa. anybody in advertising where will we get the people i think we telephone line them where are the jobs created. >> several things, jim the majority of the $40 billion

we'll invest in the first three years is take 110,000 macro sites and right size them to 85,000 while increasing 10 hang the network from a sprint on our towers and ours on theirs and have an integrated rural america jobs and rural america stores u.s. call centers expansion. there's a plethora of places we'll spend the money. i continue to believe it's going to cause the rest of the players to spend more, too it's going to be good for america. we look forward to telling this story every minute all day. >> john, it's david again. i would assume if verizon is listening to the talk you've had over the last 24 hours in terms of their inability to deliver 5g they're wondering what you're talking about. they have tests in a lot of markets. boston, check it out they're spending billions and billions of dollars and talking about this being commercially

available in the not too distant futu future what am i missing here >> i'm happy you read the question that i e-mailed you i'm kidding. here is the deal, ready? i'm going to give you one stat what they'll do is building millimeter wave. high brand spectrum to do fixed bro broad band replacement if you use millimeter wave strategy to build nationwide network, you need 1 site per thousand square yards. you need 6 million sites at 250,000 per site 1.5 trillion ain't going to happen. okay the only other alternative, they don't have access spectrum because they're out, they would need to kick their customers off of lte, refarm, and go to 5g if it wasn't tv and i would say a word they are. they're hosed. they've got to do an above face. they have to stop lying.

they can't do small millimeter wave broadband replacement and the best way for them to learn that is watch somebody else help the united states gain leadership position. and then come back and in and spend the money they're withering away. >> i'm struggling. i got a sprint -- every single corner i got a sprint and t-mobile store come on, marcelo your stores will close people will get thrown out of their jobs do you have ideas? >> absolutely. what we're planning to do is choose where the best stores are and then the growth expansion of the stores we operate in certain parts of the country. expansion is going to be nationwide we plan to cover the same territory that verizon and at&t do with the 5g network we plan to hundreds and hundreds of new stores. but the whole idea is we have so much to choose from. for every store we close in an urban area, we plan to open the same in suburban areas. >> other than the towers, where is the synergy how do you save money so our

bills go down? that's stale bill a big factor people don't want their bills to go up. >> first of all, jim, your bill couldn't go higher you pay so much. >> i have a family plan. >>well, come on. help those poor people help the military. help the vets. come to t-mobile 26 million of the 43 billion is from network site decommissioning and site avoidance. then 11 billion of that, that is sales. you got 6 billion that is i.t. and spending, et. cetera one of the things that we did, we announced that the new company will be called t-mobile. what we didn't say yet, we own the brands sprint, t-mobile, boost, metro, virgin okay we haven't made decisions yet. that's an amazing brand portfolio. ready? we have 127 million customers. 70 million postpaid brand customers and 30 million prepaid.

by the way, that's 100 million branded customers. at&t has 93 million. welcome to the back of the bus, at&t so there's a lot to do and as you know, any time you have a job creation, some go up. some go down there's a rationalzation the net is an increase in opportunity. >> here is a statement from verizon. we remain focussed on providing customers with the most reliable 4g network they're going to play up the uncertainty regarding this, right? is that not an inhibiter. >> yeah. they need to buy dish. they have salivating they would have done this how about this did you see the results the other day? all i know they lost customers service revenue is declining the application that you use that for is instead of sitting on your couch and watching netflix with your comcast connection

you can watch netflix with your verizon. 5g will bring a hundred times more capacity. a hundred times faster speeds. ten times the latency. how is that going to work in one pipe in one geographic area. you need nationwide 5g we'll bring it to america. >> i would like to know, we have a lot of viewers who are getting the orders what kind of business is this? what kind of teleco. if you're going to do 5g there are five companies that will do better next year than now. how about the names. >> first of all, one other thing to think about 4g that's what created uber. that created snap chat that created airbnb. that accelerated amazon and facebook and google. so with 5g innovation, a whole

new group of entrepreneurs are looking at what to do with the applications where to put that network. that's a big piece obviously, from a traditional standpoint, there will be tremendous amounts of equipment we're rationalizing the ones we use. the big innovation cycles are the people that are creating 5g applications iot uses smart city and smart agriculture. that's a big one. >> david >> john, and i know we'll get the opening bell in a minute you know, you spent your career deriving many of your competitors. i hear you talking about the potential competitive threat from cable companies namely our own comcast, our parent, charter, and their mdno. are they really a potential threat to you guys >> oh, thank you [ applause ] >> that's all for you, john. >> yes

before you answer, let's get to the opening bell the s&p at the bottom of your screen john, i'll let you continue. >> okay. jim, here is the story in q1 comcast or postpaid phone customers of at&t and verizon combined lavs year they added more than at&t and verizon combined. analysts actually believe that comcast and charter could add 5 million customers in the next two years. and the npv of the value of their wireless business is 20 million. whether or not you believe it, at&t is the largest cable provider in the united states. right. so there is an adjacent industry

game going on. it's not just wireless and cable. we want to play in those spaces. and, yes, comcast it a viable player in this market. and they're ramping up charter is coming in. >> charter see that quarter. >> charter is coming in. i saw their quarter. i saw verizon's. i saw comcast. we're going to announce ours this week. i don't know maybe ours will be better. >> i'm listening and one of the things i loved about you you're the greatest salesperson in the world and the second thing is, you ignore the lawyers but, you know, in the end, you're not going to be given the brief. i do not see you particularly in that outfit saying, listen, chief. like, hey, bud you can't do that to them. you can't trash talk the courts. >> absolutely. it's called telling the truth. >> okay, oh. these sneakers will be at the doj and the white house and the fcc i'll answer every single question about what they want to talk about i have the right story on our

side we're going to drive 5g that this country needs we'll save it from behind china and others that could be a security threat. super charge the uncarrier broaden the rural america opportunities, broadband opportunities, lower prices within and more jobs talk about it any way you want shareholders will bring huge value. this deal will be approved it's going to take some time i'll be in there any my language and clothes talking about what is good for the american people. >> let's say it takes two years. 18 months. how many customers will you take from him in the next 18 months how many do you intend to take >> as we say, we will both continue to run our companies and i will tell you that our assessment of the synergies of this company assumes the potential losses that takes place about leading to invest. >> if you look at mainly the last 12 quarters of growth, there's two companies that have been taking market share away. and it's always been t-mobile

and sprint that's not going to change you see two disruptive forces. a lot of people forget if we go back in your bag, at&t and verizon used to basically have tons of overages we launch unlimited first. i think t-mobile launched a couple of days later we basically change the u.s. landscape forever. every single american today got signed off to unlimited. no other country has that. overages are gone. what you saw happen with the disruption of unlimited, how we disrupted the u.s. market. we're going to continue to do that we're still separate companies when you put us together you can turbo charge it and see the same disrupters and offering a better product, lower prices, and attracting new jobs. >> carl and jim, one more thing. wait, david. i need you too we'll get the deal approved. i know what to tell the regulators what they need to hear shareholders will create value my big question to the three of you, on the day we close and create the new t-mobile, can i

have each of the three of you as new customers? yes or no? >> you're a partner to the show. >> sure. whatever you need. >> there you go. there's a yes. >> yes. >> carl? >> no, no, no! are you kidding me that means we have 67% margin share in the new t-mobile. >> if it's turned down on regulatory grounds, what then? what's the plan then >> you can assume that before we enter a transaction like this, we studied the poster child of a merger what are laeg iters looking for? you'll bring more competition to the marketplace. check. better product and better prices doesn't get much better than this secondly, the u.s. needs leadership on 5g period we cannot fall back to china and south korea. 4g drove innovation. 5g will drive a whole new one. people say the benefits of 5g is

what color tv did to black and white tv the big question is jobs the company is about growth. you bring better products and more prices and better jobs. it's a poster child. so we feel very confident. you can rest assure that we've done a lot of studying before we entered a transaction like this. we have not talked to the government yet, but we feel good we have a compelling proposition. >> i'm seeing yellow. >> david >> yeah. >> guys, by the way, now i'm very concerned i wasn't thinking about it yesterday now 5g in china. it's all i'm going to think about us falling behind. wow. >> why we're here, david. >> yeah. what happens to the 27% stake that softbank has? what is the intention there from you in terms of maintaining that stake in this combined company will it be years or when you see the opportunity, to potentially put up a win in terms of the investment and return from it over the years, will you start selling stock?

>> we're committed this is putting t-mobile and sprint together. and you follow the commission fund you follow the investments we're doing and the world's best 5g network. i'm looking forward to find the synergy between we have with softbank and combining it with a new company. we're in it for the long-term. we roll all of our equity. this is a cig equity it's $25 billion of investment that when you add the synergies, we expect it to grow we feel good about it. so we're in it for a long-term and it will be one of the primary investments of softbank. >> john. i need to have a commitment from you now that there will be more people working for these two companies. there will be more people. there will be more spending. and my bill goes lower i'm still not hearing these will all occur. >> my name is john i would like to commit to you,

jim, there will be more people employed from day one with both companies combined prices for consumers will go down prices for competitive people like you will go way down. we'll invest $40 billion in the next company in the next three years and drive the innovation that country needs. >> we're going to save that tape. >> i am. >> yep what are you swearing on a bottle of, you know -- >> the television set. >> go fourth and multiply. >> hey come on. >> all right thank you for your time. good to see you. come back soon. >> will do marcelo claure and john legre. nice gain at the open 136 points we haven't made the point of what a busy week it will be. 133 s&p companies with earnings. we have a two-day fed meeting. we'll have a jobs number there's a slew of macro data including march spending and income. >> and t-mobile arnings.

i mean, you know, this is just kind of a much bigger week particularly because one more person has now said that apple will have a shortfall. if anyone says you're going to have a shortfall, this is still a shortfall. question, they cut his mike. this must kill him. >> mcdonalds is going to lead the dow this morning $1.79 beats $1.67. >> monster and once again unfortunately reported before the big sell-off and it was a good number the stock got clocked as an ability to go right back these numbers are incredible this is not a small company. to keep beating the u.s. and the u.s. this is about mojo, as he said to me over and over again the franchises are buying in they're spending more money. they love them multiday ahead. >> yeah. they call it the experience of the future they'll add 4,000 accelerating

the program 4,000 more restaurants this year. >> i hope they keep changing the food chain he wants to be more natural wendys is natural throughout it's been great throughout the chinese can't destroy the fast food industry it was one of the things by these two gentlemen. it's become -- it's a bipolar world. whatever the chinese can't destroy we buy whatever they destroy, we sell. >> now that our guests have left the set, david, son-in-lme refls on the half hour interview we did. >> listen, they came back time and time again there will be key considerations for them we started and end with it will they get the approval they need from the department of justice, the fcc to be able to do this deal we shall see we'll be covering it over a long period of time as they certainly seek to do that. and i was kind of kidding there, but they are trying to raise

this 5g as a huge nationalist issue. figuring right into the narrative that we're hearing, as jim said, from the administration overall but, by the way, guys, you know, this deal was not the only one, jim. i would love to get your take on the marathon endeavor deal this morning. a cash and stock transaction of size good deal? >> a great deal. i'm telling you, it's brilliant. marathon, they do so many things right. some people would say it's anti-competitive we don't have that many refiners we need more refiners. this may have a little bit of problem getting through because, you know, you can possibly close some refineries if you get this done jobs lost, prices increased by refiners this is not -- i don't see a free pass here. >> interesting so anti-trust could potentially figure at least you think into this, as well.

>> yeah. i think we all want lower gasoline prices. i could argue this is going to raise gasoline prices. that's something the president doesn't want the other deal where they're buying the tcc that's positive because it's infill. same day delivery. you need it to be able to work for amazon. >> even despite our vulnerability to shipping costs, cost lo jiggists. >> it could lower the cost freight is a big issue i happen to think that we -- i'm not saying the refineries are strong, man. i'm saying the government mentioned that the government is interested in visibility of lower gasoline prices the president hates that stuff. >> it would be the biggest independent buying capacity. >> yeah. do wehave too many refineries? so arguably we need more refining capacity because we have so much oil we have to be able to refine it. the other deal is brilliant

because prolodge is committed. it's an amazon amazon stock already up. this is what amazon needs more than anything. inner-city warehouses to get the stuff to you same day. that's what it's about it's brilliant. >> a lot of side stuff to get to today. two double upgrades of wells fargo and spirit over jpm. >> i found that questionable about spirit but they're saying you take jetblue and bring the red shirt. they didn't like international but spirit doesn't have that much international spirit's pressure has ended. the wells fargo double upgrade make aston of sen makes a ton of sense there's no more substantiative trials by any government agency justing agency >> david, you have a bus sy day.

you'll talk to david solomon a little bit you'll try to keep pace what happens in the closing arguments. >> interestingly they will be in a panel with me today. i don't think he'll entertain a lot of questions or about today's news or yesterday's with t-mobile and sprint, carl. i'll try to put it to him. i don't think he'll join us on-air, either but that will be interesting, certainly from my perspective when it comes to that. we'll talk to general atlantic shortly. big investments there in the likes of uber and airbnb i want to come back on the larger theme we've been talking about in terms of 5g and broadband to charter and that horrible reception those numbers got. a lot of people trying to figure it out over the weekend, jim, in terms behalf do you do with the stock? comcast also caught in that. they came up well short in video subs even though that's not the key part of the business that concerns people.

you're talking about a company, by the way, jim about $13 billion buy backs in the start of 2017 and average prize of $360 a share took their leverage up to 4.2 times that in other words would have been 3.7 and we're buying back stock higher than here. people worry they don't have visibility on the business you know why the proliferation of the ott plat forms and how quickly people are coming off the bundle. >> yeah, david i mean, i think that it's a little disenginous for john legre to say charter is moving in and they'll have an impact. you know our parent company, david. he made a claim that i think bears. comcast has been aggressive in signing up better than at&t which clearly has been the falter in this particular quarter. at&t's top ten worst quarters of earnings i so just question whether they have more state power versus comcast in picking up customers. >> yeah. it's been an interesting quarter when you look at the earnings.

at&t suffering, as you know, that stock down over 6% roughly in that day in question. time warner shareholders saying at this point we don't care if the deal goes through or not given where the ratio is we're blow telow the bottom. verizon, jim, comes out looking very strong. they once tried to buy charter so, you know, interesting times. >> indeed. >> vierszerizon had a great cal the stock continues to go higher. >> chicago pmi is coming out now. we'll get to rick santelli. >> yes we're expecting a number around 58 the last look is 57.4. 57.6 subsequently we tacked on a couple of tens it's a little disappointing based on expectations, but these truly are lofty numbers. the lowest level of the year both the over numbers are over 60 over 60 was an oddity until the end of 2016. as far as the markets today,

most yields are highly unchanged. down one basis points in 10. if you look at a chart of two-year note yields to august of '08, it's important to pay attention because last week one of the biggest talking points just in general about everybody looking at the short end for their investment we touched it today at 2 1/2% on two-year note yield. why take the risk for less than 50 basis points to go to a longer maturity. what fascinating, we haven't had a close above 2 1/2. even though we traded above 2 1/2. that chart says it all it will dictate the next trade and maybe a bit more in terms of follow through the high on that is 303. the low is 295 both are a significant high. both for 2018. the latter served the former now we're in the band between the two. look at one week everything is drifting on the

long end even with today's data we want to pay attention we've gone from over 240 basis points of separation the widest and even the two year going all the way back to the '80s it's significant it's under 240 on the long end look at the dollar index we're going to concentrate on that than the star, you know, today we've gotten close to 92 today we're getting close to 91.90. there's a nice look to the holding. if you look at the year to date chart it says it all nothing is more important than opening up the year. we closed last year at 92.12 we traded above it for a handle of trading days in the begin of january. we drifted below it. it's a retest and it's going to be significant if we can slice through it carl, jim, david, back to you. >> thank you for that, rick. s&p has gone positive for the year again we'll get to bob. >> a great start happy monday three to one advancing declining stocks and the right stuff moving up.

only thing not rates down. consumer discretionary is strong, tech and financials are up energy is the market leader the month of april almost 60% of the way through earnings season and the numbers keep getting better. essentially at 25% earnings growth second quarter held up we were 19.5 in february there's no he cline in the second quarter which is critical often we see them come down. q 3 and q 4 through the 20% range. and frustration about the muted reaction about the earnings situation. we're flat since april 12. jpmorgan was april 13. banks are up a fractional amount despite higher rates industrials are down we talked about semiconductors they're down i look at this a little differently. my attitude is the s&p is essentially range bound. look at what happened at the end of the year last year when the

tax cuts got real, beginning in october, the talk started. we went from 2500 to 2900. and then january we went up 16% in three and a half months. there's a huge blow off. i don't think it's the end of things at this point, we're consolidating now. moving sideways is not a bad thing after you had a 16% move in a little more than three months here. last day of the month and we have a new leader, finally energy problem it's not big enough to make a big move on the s&p industrials and consumer staples and you know about semiconductors they've been down for awhile i think the endeavor deal is a big deal there's some consolidation here. it's not a big sector the refining business. i think marathon is using 85% of the deal for equity. philips 66 is pretty small the basis is consolidating we got more earnings from the big material companies and the steel companies are doing well

ak steel had a good quarter. basically they came out and talked about the beneficiary of higher steel prietss we've hear a lot of people complaint about the higher input cost from steel and aluminium. ak steel acknowledgedaluminum. solid demand automotive solid and they, too, complained about increased raw material costs everybody is complaining about the steel companies raising prices and they are arguing they, too, had higher input costs and they're just passing them along the dow near the highs of the days 172 points >> bob, thank you. when we come back, more reaction to the t-mobile/sprint deal and our interview a moment ago. s&p as we said green for 2018. and going for a fourth day up. the longest win streak in a couple of months back in a moment ♪

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♪ good monday morning. welcome back to "squawk on the street." i'm carl quintanilla faber is out west at the milken conference in beverly hills. we get some economic data about now. let's get to diana olick for that >> pending home sales for march rose 0.4% compared to february that according to of realtors b february's number was revised down that's the third straight month of declines. it's a forward looking indicator

of closed deals for april and may. realtor continue to blame tight supply but are focussing on weakening affordability. these sales were made just before mortgage rates jumped at the start of april they eased up from the highs in january but the chief economist believes affordability will be a driving factor of whether or not overall activity can break out above year-ago levels. price appreciation in most markets continues to outpace incomes and higher rates make that tougher march sales fell the most in the northeast where they blame bad weather. small gains in the midwest itself and out west. back to you guys >> diandiana, thank you. t-mobile buying sprint in the all-stock deal what the ceos told us and the potential regulatory hurdles ahead. >> shares of mcdonald's surging. >> and the world's unicorn a look at the only white/gold

daytona rolex in existence as it gets ready for the auction block. t-mobile buying sprint in an all-stock deal the new firm will be led by t-mobile's john ledger and take the t-mobile name. we spoke to both ceos earlier on "squawk on the street. >> one of the things i've always loved about you, you are the greatest salesperson in the world and you always ignore the lawyers. but in the end, you'll not be given the brief. i do not see you in that outfit in front any of court saying listen, listen chief like, hey, bud you can't do that to them or trash talk the courts. >> it's called telling the truth. i will tell you this magenta t-shirt and sneakers will be in the white house, the doj, the fcc in the next few days i'm going to answer every single question about what they want to talk about because i have got the right story on our side.

we're going to drive 5g that this country needs supercharge the young carrier, broaden the rural america opportunities. broadband opportunities. lower prices and more jobs talk about it any way you want shareholders are going to create huge value this deal will be approved it's going to take some time but i'll be in there in my language, in my clothes talking about what's good for the american consumer >> so with all the assurances about jobs, infrastructure, store closings, david, it does appear they are going to use this 5g narrative as some nationalist cause to push this through. >> it does, carl and when you think about what has changed over the last fehr years from the last time that -- well, they've tried a number of times, but the time they got a thumbs down before they even signed anything from the fcc, that certainly is a key change the fact they're going to seize on their ability to take 5g,

take it national, and advance beyond what you're -- china's apparent lead on us that i wasn't completely aware of twwhn it comes to bringing 5g to our country and to industry, the internet of things, of course, that many people say will depend so heavily on it that's going to be a key one as will this increasing competition is also there from cable those are two things they can talk about, carl, that are different from the last time >> david, on your point, there was well-timed release of a study last week by ctia, which is a trade association for the u.s. wireless industry that showed china is beating the united states in the race for 5g that this has a potential to create 3 million new jobs in the u.s. the u.s. should be investing more china, south korea and the united states. so, clearly, they are going to use these results and put it before the u.s. government

the question is, will it work this time? will anything be different than 2014 >> right and that's the question. you're still going to be going from 4 to 3. you heard ledger make a pledge there, i think carl even crossed himself at one point make a pledge that they will lower prices that's going to be a key consideration here key to antitrust laws that have been practiced in this country for many years now is what is the potential harm to the consumer can it be proved there will be harm to the consumer if there is, i don't think these deals happen those who stopped at&t from buying t-mobile in 2011 are probably looking at this deal and saying, we're very happy we did that look at all the competition that unexpectedly was brought to the wireless market, not by sprint but by john ledger and t-mobile. the unlimited plans introduced the prices stl s that have come. the difrentiation of services. plenty of people say this is the

most important bill any consumer pays in a month and why would we go screwing with something that seems to be working well right now. >> the other thing is the share price reaction sprint down 13%. t-mobile down 4% john ledger in that sound bite said it's for shareholders they'll get a good deal. he has to convince regulators and he's going to have to convince shareholders at this point. is that a reflection of the fact that wall street doesn't think this deal will get done and approved >> part of it is the spread. they're talking about a june '19 timeline some argue it would be longer or that it's not going to happen at all. the two stocks did move up we often talk about unaffected stock prices the journal reported on these talks a number of weeks ago. the stocks moved up into that. there may be a bit of disappointment but the financial wherewithal of the combined company is extraordinary it's rare you see a $6 billion

synergy number introduced the way they have. and net present value. you throw a multiple on it and you're talking about creating $43 billion in value as a result of how much will be saved from putting these two companies together it's something that in many ways masa who runs softbank thought he had to do from the earliest days of running sprint he's given up control of this company. softbank will own 20%, and it will be controlled by germany's deutsche telekom which will consolidate its financial results on its own and a ownership stake of 42% >> david, don't go anywhere. the last deal fell apart in 2014 when doj and then-fcc chairman tom wheeler warned any deal to reduce the number of wireless carriers in the u.s. to three would not be approved. tom wheeler joins us from washington

>> great to be back. >> we had a big discussion with these ceos about the notion of timing and i'm wondering if the third time is the charm given where we are as a country right now. >> i'll stipulate that john ledger is the world's greatest salesman, but what he's selling right now is old stuff you are trading the fact they have benefited as a result of this prices are down 13% in the last 12 months. you're trading that certainty for the promise that maybe this new premium technology of 5g will change the nature of the network. and what's really interesting is that both of these ceos, before they did the deal, said we're going to be great in 5g, major players in 5g. we're going to bring competition in 5g. all those promises have

disappeared all of a sudden. >> tom, let me ask you about the 5g urgency that it sounds like john has really communicated and they're trying to make the case that we're losing to china and china supports its industry, its telecom business it's investing more by 2020. they have this plan in place they'll be faster when it comes to the wireless speeds of the future is that going to be a case you think they can make before the u.s. government and actually win? >> i think there are several things you have to realize 5g is a term that has multiple definitions. it's been very recent that t-mobile has been saying we spent $16 billion in this spect rum auction to buy spectrum so we could be first to market with 5g and all of a sudden, that argument seems to have disappeared. there is verizon who is using

other spectrum, higher up the millimeter wave band, who says, well, you know, maybe we've got to be suspicious as to just how marketable this product can be and maybe we'll get 30% of american households. and then in the midband you have people there such as intel sets saying, hey, buy my spectrum or let me sell my spectrum so you can offer it there there's all kinds of different definitions of what 5g is. and no real understanding of what the market is or the demand i take t-mobile at their word that they said that they were going to roll out 5g in the new spe spectrum they bought from the fcc and didn't need any thop do that i think that's a legitimate point, and i think they will >> tom, it's david faber the world does change.

and even though you may go from 4 to 3, wouldn't it be beneficial to have a much better capitalized third player able to really do what it needs to do on the cap ex, things you're talking about to bring 5g, not to mention when it comes to the world changing, we've got comcast and charter actually seemingly competing in markets for offering wireless services and the possibility that 5g will compete with broadband from the cable companies. i would assume in many ways that's a good, competitive market >> you wrapped up all kinds of questions in that. let's see if we can parse them first of all, whether the balance sheets of the companies are is a problem that should not be solved on the back of the american consumer. the fact of the matter is that competition has been great for consumers.

insofar as cable's new competition, which you have to celebrate, all of the analysts, and i think the reports on cnbc have been that this has been a disappointing roll-out now i believe there might be something there in the future, and we want to encourage that to happen, but it hasn't happened so the question is that you're trading off a known benefit for consumers against, well, maybe it will help with 5g maybe there will be competition coming down the road and the job of the fcc is to assure that the public interest will be advanced by a decision and the job of the department of justice is to assure that the competitive market will not be jeopardized by a transaction, and in 2011, they looked at going to 4 to 3 and said you

can't pass those tests in 2014, we looked at those same, going 4 to 3 and you can't pass those tests you still can't pass those tests, and promising something might change in the future doesn't change that. >> well, aji pie has a different view than you on a lot of issues do you think the fcc will play a key role or will it commune do to the doj's role. >> i have no idea. i'm not the guy to ask what the trump administration is going to be doing but i think it's an extensial test for people like the chairman who say that they believe in the chicago school, in the schochicago school says t is the impact on consumers as measured by prices and you've seen a precipitous drop in prices, an increase in value, an increase in services,

and as i said, the job of the fcc is to make sure the public interest is advanced and i think that's a high hurdle >> so it's -- does it end up being a battle between that focus on consumer interests and the white house calling 5g a vital national priority? is it a battle of those two things >> i'm glad you raised that. what the white house said about 5g was that they were thinking about nationalizing it and they were thinking about whether there ought to be one single carrier that parses out -- that serves all carriers. that clearly is the most advantageous in terms of how you get 5g >> that got walked back pretty quickly. >> the interesting thing they did is why they did that, they said that we needed to have better cybersecurity

yet when we approved the first 5g spect rum in the world, while i was chairman, we said you have to build into the standard cybersecurity requirements and when the trump fcc came in, they eliminated that requirement. so we're now having a discussion about a new technology that is being designed without any thought to cyber and without the government saying here is how we protect our infrastructure that's a key thing that we need to make sure doesn't get lost in this whole discussion. >> tom, we hope you'll come back this just got a whole lot more interesting. appreciate your time, as always. tom wheeler, former fcc chairman when we come back, general atlantic ceo william ford. plus, mcdonald's shares soaring today. increases in menu prices giving

earnings a big boost very impressive sales numbers. we'll dive into those numbers and the turn around steve easterbrook has engineered here. mr. elliot, what's your wifi password?

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here at post 9, oppenheimer strategist brian levitt. good morning we've got a little rally under way. as you look from the beginning of earnings season the market is up less than 1%. earnings tracking to be up 20% to 25%, the best in years. strong revenue growth. what's the disconnect? why are the markets proving so hard to impress here >> the market had gotten ahead of a good earnings season and we're dealing with a -- you're almost if you do, it's not good, if you don't it's not good and what we've got is a good economic backdrop that's led rates to go up to 3% it's led a little strength in the dollar the market digested the good earnings report. i think it's just, you know, a little bit of a churn in the market i don't suspect this is the end of the cycle. >> a little bit of a churn or real concerns about a turn in the business cycle >> i'm not so sure about a churn

in the business cycle, but i look at two big disconnects. one is, as you said, strong earnings season. more than 60% of companies are beating on the top line relative to, say, 40% usually that's not tax reform. that's growth. and we saw mcdonald's results this morning the other is we've got oil in the mid-60s now for several weeks. and yet master limited partnerships which have been left for dead are still appear to be left for dead. they're about 20% to 30% under value if they were to reconnect with oil the one thing driving a wedge in this whole deal are interest rates. right now with a ten-year treasury at 3, fair value for that ten-year is likely to be 4. >> now we're watching cap ex half the season, coming in okay. a lot thanks to tech and oil prices to some degree. does that mean we'll start to feel the kick in from tax reform and all those incentives to

invest >> we should expect a better second half growth environment so it's right. a little slowdown in growth in the first part of this year. that's going to be -- that's going to accelerate into the second half of the year. what investors need to focus on is fiscal stimulus at this point of the cycle appropriate and does that bring forward monetary tightening and does that kind of lead the u.s. to bounce between expansion and slowdown we were in a nice sort of gold y goldilocks environment so to me, that's why the markets are getting concerned. it's a little tight labor market we're doing some cap ex, inflation is going to trend higher fed is going to tighten. that will create more volatility, but the cycle is not going to end until the yield curve. >> we also saw a bunch of deals

this monday. feels like a real merger monday. is that a function that rates are going higher or maybe extra cash from tax reform or none of the above? >> i think both of the above i think there is a sense, where we've repatriated already trillions of dollars of cash from overseas. we've got more cash in the bottom line thanks to tax reform and the prospect of tighter credit conditions in perhaps the second half of the year are all owing to this maybe somewhat sense of urgency to get some of these deals done i think it's actually good news. we've got a 2% economy the way to grow faster than 2% is either take your competitor's market share or start to consolidate. that's what we're starting to see. >> look for more of that where that came from jack avalon and jack levitt. when we come back, general atlantic's ceo william ford will

join david also lloyd blankfein's likely heir apparent david solomon. dow easing off a touch here, up 76 points. back after this.

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welcome back to "squawk on the street." i'm david faber at the milken global conference here in los angeles that brings together as many as 5,000 different participants one of them, bill ford, the ceo of general atlantic. a $24 million asset manager that invests primarily in private companies but we'll focus on some of the private names, whether it's uber or airbnb. you've taken significant stakes in these growth companies. do you continue to see the opportunities now that you saw a few years ago? >> absolutely. if anything, i'd say growth and innovation is alive and well and it's spreading globally. we've got some very exciting entrepreneurial companies in europe, china, india and latin america. >> how do you go about sourcing a company for example in china

where i know you've been active, but we're at the nyc every day if there's an ipo oftentimes it's a chinese company but we wonder about the transparency, the ability to understand the business and to feel confident about what you're looking at in terms of financials. >> we've learned over a lot of years to be successful in any of these emerging geographies you have to have feet on the ground in the geography and teams of local professionals. we are in china specifically we're in beijing, shanghai and hong kong and we have 12 all-mainland chinese professionals. so i think it's the way you can manage risk and deal with issues of transparency. >> china is coming up so often in the dialogue. this morning with the sprint/t-mobile merger 5g china is in the lead, they say the trade dispute with china right now. the idea they're technologically a threat to us is that true >> i think they have reached

parity in two areas. they've invested heavily in these areas and let's not forget the strength they have by having a 700 million unit mobile internet market. 700 million mobile phones in china. that allows them a tremendous base for innovation. i'll say some of the most exciting companies we're seeing in the internet space right now are in china one company was in the news last week they're doing 30 million food deliveries per day and they're leading a local commerce company in china >> do you worry about the rhetoric heating up and potentially real hostility between our two countries when it comes to trade and whether that will impact your ability to invest >> i worry about it but i hope not. i really hope we can maintain good relations as both companies prosper and grow most of our investments are capitalizing on the domestic

chinese market we wouldn't be as significantly impacted by trade. but for the world it's better if both companies prosper together. >> let's talk about investments back here in the u.s uber and airbnb. still waiting for them to go public is that going to be something we see in 2019? >> i think so. both have the scale and attractiveness to be ipo candidates in 2019 the boards are thinking hard about the right time for both. but on the fundamental basis, they continue to grow beautifully. we've got 75 million riders per month at uber. a record and 3 million riders they've done a great job >> a year ago this time, we sat down was travis, not dara do you think he's doing a good job? your happy with what you're seeing what about the softbank deal that seemed to bring the valuation of the overall company down >> i think dara has done a great job. he's focused on growth, focused on resolving some of the issues. the merger with grab in

southeast asia was brilliant in terms of making that market move from being a loss making to profit-making. i think they've done a terrific job. he's working on a cultural reset. work willing with his board. so i think they are on the righ direction. the global ride-sharing business when you think about dd, grab, ola in india and uber and lyft, it's a gigantic market >> i look back at the transfer from our conversation. you said you loved airbnb the most in your portfolio >> it's hard not to love airbnb. up to 81,000 cities, which is remarkable 190 countries. and today they have 5 million listings on the platform and another year of tremendous growth since we sat here a year ago. i think they are really doing well and their experience has really taken off as well >> lawrence tosi was a cfo he left. are you concerned in terms of management turnover at airbnb?

>> i don't think so. l.t. did a phenomenal job for air bnb. but a company with that growth profile and scale and brian is a superb leader and entrepreneur i think he'll attract talent to fill the cfo position. >> the renaissance in ipos you and i were talking about this a year ago. it hasn't really hand. we've seen spotify list, although it didn't go public we've seen a couple of others but not the avalanche that some anticipated. >> i'm going to go out out on a limb and say we're on the precipice of an ipo renaissance. one in our portfolio is called audien it's an online/offline leader with companies like uber, facebook, nike, microsoft and they just won an important account, ebay, from paypal and they are growing 75% they do $125 billion of transaction volume and they're helping retailers like nike

manage both e-commerce, but as well as their store environment. so there's a case of a european company that's doing really well a real technology -- >> why do you think it's coming. you didn't explain why now >> back to your question two reasons. the equity market is working ipos for the year up 13% in the aggregate. and i think we're moving into the sweet spot in terms of volatility if you look back on history, when the vix is not too hot, not too cold in the mid teens it offers sufficient volatility on return i think those conditions are just right and combine with the fact there are other high quality companiy ies we talked about, uber, airbnb. all lining up to go. so i think it should be a very exciting time for ipo investors. >> we appreciate you spending a little bit of time with us

>> enjoy the conference. >> you, too. se time for our etf spotlight mike santoli looking at the boom in m&a up more than 50% compared to last year, mike? >> yeah, that's year to date about a trillion and a half dollars even before today's announced deals of about $100 billion of additional m&a transactions in terms of etfs you have to focus on the already announced deals, essentially buying the targets and playing the closing of that spread the risk arbitrage spread. this is that classic wall street strategy of essentially shorting the acquirer targets and owning the acquirers and owning the targets, but this really just shorts the market against those targets. it's really not a shoot for the fences type of strategy. you are really looking at bond-like returns. hopefully all these deals close and you capture that little bit of return. so it's not so much about

picking the next target that nobody knows about it's the known kind of burden the hand target and playing that spread at&t and time warner in the news now which shows you that spread is not always certain to close depending on how the deals go. >> certainly a lot of deals today all around the world mike santoli let's get over to sue herera for a news update at hq. >> good morning. here's what's happening at this hour a coordinated double suicide bombing by the islamic state group hit central kabul this morning killing at least 25 people, including nine afghan journalists. at least 45 people were wounded in those twin attacks. secretary of state mike pompeo visiting jordan and meeting with king abdullah in amman. it's his first official trip abroad as america's top diplomat before jordan, pompeo visited saudi arabia and israel. north korea announcing it will sync its time zone with south korea beginning on saturday pyongyang says the move was made

at the proposal of kim jong-un who found it painful to see two clocks indicating different times on the wall of the summit venue. nearly 200 central american migrants attempting to seek asylum in the u.s. have been told that they will have to wait until a border facility near san diego has enough space to accommodate them hundreds gathered at the u.s./mexico border on sunday to greet that caravan the trump administration has described the group as a threat. that is the news update this hour carl, back to you. >> sue, thank you very much. when we come back, the unicorn of the watch world a white daytona rolex expected to rake in $3 million or more as it hits the auction block. we'll have it next when "squawk" continues. your company is constantly evolving.

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and rick santelli. >> i'd like to welcome my guest, former congressional budget office director douglas aiken. thanks for taking the time to join us this morning >> thank you >> last week we get our first look at first quarter gdp for 2018 if we look at some of the previous numbers over time, we see that they are indeed not necessarily linear in fashion so you go from fourth quarter '16 up 1.8 quarter '17, first, 1.2, second quarter, the last quarter, 2.9 so what conclusions do you draw with regard to the ever-changing landscape of growth and the notion that it isn't moving in a linear fashion with every quarter always moving higher or staying close to or above 3% >> well, the biggest lesson is to look at this quarter in 2018,

the first quarter versus the first quarter in 2017. that's the apples to apples comparison always weather and other things in the first quarter if you look at that quarter by quarter we see the economy accelerating getting stronger and stronger every quarter. that's the right way to look at the outlook for the economy. >> all right you know, now that larry kudlow is part of the team, of course, one of our favorites for many years at cnbc, one of the big issues he talked about is working on this tax reform plan that was ultimately passed at the end of last year was the notion of instant expensing equipment, it's going to bring a lot of activity forward and they wanted it indefinitely i think they have a cap on it in 2022, five-year cap. but when you look at that notion under the context of some of the durable goods notions where you get orders of capital goods, all the different metrics for business spending it doesn't

look like it's happening am i being too myopic, too short term >> i think it is showing up and you're being a little short term because, first, what's the easiest thing to change? it's financial transactions. we've seen the large companies bring their way back the second thing you can change are your plans if you look at indexes of planned capital expenditure, they are at all-time highs look at the national small business federation. that's at an all-time high nfib so we're seeing the plans change what comes next are orders we ought to see orders going up in the second quarter and actual investment going up later this year we're on track it just takes a little time. >> doug, i'll tell you what. as this moves through, we'll continually go to you and maybe even give us more intense glimpse on exactly what's moving under the surface.

thank you, doug. sara, back to you. >> rick and doug, thank you. take a look at shares of walmart. a winner in today's session. walmart agreeing to sell its british unit to the rival supermarket in a deal worth about $10 million. walmart will hold a 42% stake in the combined company tough business uk grocery. robert frank is here you know what's coming up is going to be good >> it's going to be good and really expensive these watches are so expensive, we needed two bodyguards to bring it to the exchange we are going to show them to you, including a watch this called the unicorn. more than $3 million and elvis presley's watch in omega. i'm going sw tohoyou all of them and talk about the watch industry right after this break.

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shares of mcdonald's up and leading the dow after the earning beat strong sales from menu price increases and a big rise in global same-store sales. let's bring in david palmer from rbc capital markets. good morning >> good morning. >> best day in just over a year. is this about taxes or is there history of outperforming peers intact >> that leadership market number was outstanding. an 8% come from marketed like the uk, mainland europe, australia, canada. those markets are not only do they have a leadership position against their peers and bigger leadership position than even the u.s. where they have 11% or 12% share. but not only that, but they've done a lot of the things they're talking about doing in the u.s. earlier. renovated those restaurants. elevated the food and created digital conveniences that are

really moving that brand further, faster. and so that's bullish for the long-term future whereas in the u.s., things are slower because of some of the hiccups on the value side. >> dunkin brands, the owner of dunkin donuts reported comps last week down 0.5%. nigel travis was on cnbc and blamed competition and value meals. is this a story of mcdonald's taking from dunkin >> mcdonald's comp was -- in the u.s. was somewhat, almost 3% comp was an impressive number given the fact the u.s. fast food industry is up less than 1% so to some degree, the industry was not very good in that first quarter. weather impacts that were probably a factor. but certainly the value out there as a factor for a brand like dunkin that depends on the coffee business for about 60% of their sales. and dollar coffee has been a factor out there

it's weighing on them. they are responding in the second quarter with their go-to value platform and that's helping dunkin in the second quarter whereas mcdonald's is having to now lap. >> in other businesses when a company is in an investment cycle, it's sometimes fodder for bears. is that working here all these investments, the delivery roll out, going fresh, the experience of the future how much are we looking at a balance sheet in the wake of all of that? >> well, the franchisees right now, they are spending a lot of money. to some degree with the costs of doing business higher, particularly last year there were some elevated food costs to go with the wages but these franchisees are digging deep it's causing consolidation or a sale of units by certain franchisees to other franchisees. so they are spending more on their restaurants. the good ones are getting more

restaurants. this process is going to be a little messy and probably expensive for the franchisoeys but as we see, mcdonald's usa will be in great position when the re-img imaagis done with all the electronic ordering capabilities. >> you mentioned wage costs rising overall question on inflation. how do you play a company like mcdonald's if we start to see prices rise across areas of the economy? on one hand they have higher costs when it comes to food and wages but on the other, people aren't going to shop at grocery stores as much, right, if the prices are rising. so is it a benefit to mcdonald's or is it a negative? >> one of the things causing a little hand wringing lately is we're seeing higher costs but haven't yet seen it come into the fast food industry comps like we normally do. at this time when you see wage inflation, a tight job growth, we're hearing about those higher trucking costs out there truckers are making a lot more

money. why aren't they using fast food more right now we should be seeing more traffic growth than we're seeing and we would expect to see a bit of this coming into the summer, a little better industry same-store sales growth due to the inflation you mentioned. as for as relative food costs, those are a bit more stable. that's not going to be a big factor more about the economy n waand wages. >> what happens to your estimates and price target here, david? >> well, we, you know, you can see that we have -- we're going to have to look at our earnings, and we have a price target in plis of 170. the bottom line for mcdonald's is this is an earnings stock, and they beat earnings this quarter. from here it's going to depend on whether they can continue to have the profitable growth they've been having in markets like the u.s. and leadership markets but the big update here was the leadership markets outstanding result for markets like the uk and canada and other

markets where they're ahead of the curve versus the u.s that's good news for the stock today. >> maybe it didn't snow at the mcdonald's locations in the uk because the weather was troublesome in q1. david, thanks. good to see troublesome in q1. >> yeah. >> let's send it over to jon fortt now with a look at what's coming up on "squawk alley." >> good morning, sara. heir apparent at goldman sachs will probably have something to say about m & a, perhaps a statement on the economy and the market that's coming up

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welcome back to "squawk on the street." i'm dominic chu. half a percent in early training, arconic. they say it will be a year in transition now back to you at the new york stock exchange sara >> dom, thank you. the only known white gold daytona rolex, estimated value of over $3 million we are joined by our very own robert frank and paul butros

robert, take it away. >> good morning, guys. phillips auction house about to sell over $24 million worth of watch this is month. this watch is called the un corner because there's only one. tell us about what could make that worth over $3 million. >> for collectors of wristwatches, when the world found out that row lax made a white gold daytona, the collective community's jaw dropped. in the past they were made of stainless steel and yellow gold. when this came to market and was announced in 2013, it surprised everyone it has become now the holy grail. it's the ultimate daytona. >> partly because paul newman's row election daytona sold for just under $18 million that was a life-changing event in the watch world what did that do to prices soared prices for daytona.

>> in the world of modern luxury watches and in vintage watches, it's the most sought-after model in general. >> the best selling watch in used and new watches >> most sought after, yes. it's quiet coveted with the result of paul newman and the publicity that brought, the demand for daytonas all around the world, vintage or modern, grew a lot we felt it was the right time to dedicate a sale to the daytona. >> i want to quickly tell people what the other ones are. this is a watch that robert downey jr. wore as ironman in the movie. that's estimated at 50 to 100. this watch, can you flip that over and tell us who the owner was? >> this watch is a wolf in sheep's clothes. it is the most important elvis presley owned timepiece to appear on the market it was given to him in 1961 for selling 75 million records,

first human in history to achieve that milestone. >> so, elvis loved the diamonds. he loved the bling he loved really flashy watches. >> he was a lover of timepieces. and you will find that he had been giving his watches to people in this case, someone was sit ing at a casino, elvis spots him and says that's a great watch and he says i like your watch. let's trade. >> paul, why are watches, rare watches rising in value? is this a demand story or are there just more cooler things coming into the market >> fine mechanical wristwatch will last an eternity and those that are classically styled will last for generations. >> you know which one i'm fascinated by, that elvis watch.

crazy. >> you need someone to model the white gold one >> we're happy to put it on your wrist if you like. >> also, this wasn't the original strap on it it was just an original leather strap, sfliet. >> it was originally sold -- it came to the market very quietly ten years ago and it was acquired by a renowned collector john goldburger. with the daytona theme sale, he made the decision to let it go. >> the proceeds are going to charity. >> 100% of the proceeds are going to to swiss children a wonderful noble cause. >> when we come back, david solomon of goldman sachs

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good morning, it's 8:00 a.m. at t mobile headquarters in washington and 11:00 a.m. on wall street. "squawk alley" is live