>> i blame everything on -- >> am i bringing them in no, i'm not. our demos are not going to improve. >> you're really good with the 60 and up crowd. >> yeah, i am. 80 and up. >> yeah. are you going to do this make sure you join us tomorrow "squawk on the street" is coming up next. ♪ ♪ >> history was made 226 years ago today when a pact was signed under the buttonwood tree and the agreement would create what is now the new york stock exchange good thursday morning i'm carl quintanilla with jim cramer, david faber at the new york stock exchange, happy birthday they'll join outside company's earnings futures are red and europe's doing a little bit better.

the ten-year does hit 310 and brent hits 80 for the first time since 2014 and walmart's retail rebound and e-commerce sales up 33 and the retail giant continues the progressive online transformation to battle amazon. crude oil hitting four-year highs amid renewed sanctions from washington. >> and shares down pre-market despite an earnings beat and the q-4 forecasts are a bit short and chuck roberts will join us exclusively. >> posting better than expected earnings, revenue and comps. e-commerce sales up 33 and in the release doug mcmillin called the result solid adding, quote, we are transforming to better serve customers. we're changing from within to be faster and more digital while shaping our portfolio of businesses for the future and we provide flexibility to do so the e-commerce number reind moos

us of the 23 number we got last quarter which was quickly followed by the worst day for shares in three decades. >> we have to get away from judging these companies only on e-commerce because the only standard we use now is how they're doing against amazon everything is zero sum jesus, they declined from 33 to 23 then amazon must have picked that up and we have to reevaluate walmart we ought to stop that. there are going to be quarterly fluctuations online. i think that they have a good online business. 33% is great we did the same thing with target, by the way target, the brick and mortar didn't matter. they had acceleration online, boom >> i think what we ought to be judging is a little bit more holistically of which walmart had good traffic and that's the kind of thing i'm being looking at and sam's is better and sam's has been a big drag and walmart's doing well and they're doing well in groceries which

makes you feel like, well, this is the way i like to look at it. our largest grocer in the country. maybe walmart is not doing that well in grocery. walmart's doing well people should not send it all of the way down to 83 when they try to become the walmart and amazon of india make up your minds, people. >> you're not in the camp that says 33 is great, but amazon hit 43 this quarter and one's moving faster than the other. >> amazon is moving at the speed of light and they're at the speed of sound and they're still faster than cars go. >> amazon's unfair i'm sure at every board meeting there's someone that says but amazon, and you want to take the guy out, and you want to say they are not in our league they are belichick and we're in the playoffs >> presenting at the bmo

conference and everything he said was about competitors, you can guess who. >> they have to worry about what walmart has to worry about walmart's scale which is fabulous to buy groceries may not be as what amazon does with whole foods. people are missing the beat with whole foods. >> like bobby kennedy in the indianapolis speech and they're looking at what is and not what it's going to be and they put up whole foods and they got stymied by some of your guys that get on the board and they're, like, i want performance yesterday and they've got a long-term view that's going to be embraced and you will see a whole foods and multiple whole foods in your neighborhoods and that is what walmart has to worry about. >> and i think the point is also that should be taken and walmart does have a long-term view as well and it's afforded the ability to have that view and it also has a very large shareholder in the share of the walton family that's right

around the 50% ownership of the company and that's enabled doug mcmillin to embark on this plan to really take on amazon and not worry necessarily about his quarter to quarter numbers by the way, you talk about having the wherewithal and they have 3.3 billion and 5.2 billion and we know they're making lots of investments and the flip card deal which does include 2 billion of new equity funding and this is where walmart is going to keep trying to have the financial capacity to be able to compete beyond just the store base >> and i would never say what i did about other companies that they have -- that we should stop looking at a quarter to quarter. >> i'm stopping at quarter to quarter because the family is not looking at a quarter to quarter and it's not like mcmillin's job's at risk and we're saying we ought to throw away walmart and walmart has a long-term view and jet.com

did they miss last quarter yeah, but not to the point where you want to send it down 15 points this is not a consumer packaged food story that went from 1% organic growth >> we should point out, sam's even though they closed more than 60 stores, comps are up five. >> i think that's great. >> and 12 quarters of declining comparable inventory 12 quarters which is obviously that goes straight to margins. >> yes look at this grocery >> they had solid comp sales, when walmart uses the word solid, that's spectacular for everybody else solid means unbelievably great and this is incredible, due to growth in private brands and my god, the margins in private brands are so much better than when trying to buy it from kraft hines. >> amazon has moved aggressively in a lot of different areas and they may have started with

batteries, but they're moving a lot of different places. >> if i were the justice department of which i'm not i would look into the steering how much does alexis steer you to amazon's products and i'll be speaking to the head of antitrust and i don't think he agrees with you, but when you put in alexa, alexa is a spy and a turn code, okay? right? i mean, you say you want underwear, but you forget to say hanes. you'll get amazon. >> amazon brand underwear? >> 100% cotton. >> do you think google tweaks your searches when you look for stuff? >> i think that i voted for the communist party because i read a communist -- yes it's the new world >> it's the beginning. >> we are. >> do i hear music >> are you okay, jim >> we hear nothing i hear nothing i was trying to get away from

that topic because i disagree entirely with the idea that this is bad for the consumer and it is bad for retail. >> we'll keep the a block short because cisco's chuck robbins will join us in a few moments to talk about cisco's quarter take a look at the pre-market. the dow's up 9 and tn d eranthe first since the major average. back in a minute ♪ you can be sure ♪ that it will only get better ♪ you and me together ♪ through the days and nights. ♪ i don't worry 'cause ♪ everything's gonna be all right. ♪ ♪ no one, no one, no one

♪ can get in the way of what i'm feeling. ♪ ♪ no one, no one, no one ♪ can get in the way of what i feel for you. ♪ ♪ you, you ♪ get in the way of what i feel for you. ♪

oh hi sweetie, i just want to show you something. xfinity mobile: find my phone. [ phone rings ] look at you. this tech stuff is easy. [ whirring sound ] you want a cookie? it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around.

i'm delighted that they're trying to clean up the mistakes that were said about this stock last night and this company. cisco had a nice beat. there are some people that felt that the outlook was want as strong as the street was looking for. other people, namely me, that was thrilled with the actual outlook. so let's see where the company's headed and cisco's ceo chuck robbins is joining us from san jose chuck, let's straighten things out a little first of all, this was a much better-than-expected quarter and second, you did not offer an outlook that was below what people were looking for. >> jim, first of all, thanks for having me today. look, i think there are three

key points about the quarter number one is the strategy that we laid out three years ago is working. we delivered record eps. we had continuing business momentum in the growth rate on the top line record shareholder returns during the quarter if you look at the second point of the innovation that we're driving right now in our core networking space with the intent-based networking that we launched with david on this show last june on this network, that product is the fastest product in the history of the company. we had 19% growth in our applications business and 11% growth in our security business and third, the business model transition for software and subscriptions and the software and subscription up 29% and 55% of the software business is subscriptions. we are quite pleased with where we are we thought it was a great quarter and we think the outlook is quite positive. >> all right i was hoping that you would give us a little more insight to what

broadsoft this year is going to be doing for you and what a company will be doing for you and that's a new deal and that was artificial intelligence and i was trying to figure out what cisco would look like a year from now and you were fixated by flag day. >> jim, if you look at our applications business, both of those acquisitions line up directly in that space and first of all, broadsoft, it has 20 million users out there today that we can actually bring the balance of our portfolio to, deliver cloud-based communications through our service providers which is a great, you know, part of our business and a great route to market for us. so we see huge opportunity to bring the broadsoft portfolio together with cisco's collaboration portfolio and deliver that from the cloud in the future and that's the core part of what we plan to do there and on the company side in our collaboration portfolio we've gone from an on-premise solution

to the cloud architecture and the next wave is how do we bring data, artificial intelligence into our portfolio and the young lady you know very well, and amy chang brings and we're excited about that, as well. >> let me just go before i get my colleagues and just in case people do not think that this was a robust outlook $25 billion stock and you're buying 12% of the company. >> how much of the volume is it going to be every day? >> well, we brought back $6 billion and last we announced 25 billion which the total is 31 billion. kelly called out that would be between 18 to 24 months. as you look to next quarter i believe that if you look at the earnings per share that we guided and the revenue that we guided it's one of the fastest growing quarters we've had in quite a while and also the -- i believe that the eps is a record

eps guide, as well we're confident in the outlook and we're confident in the future and we believe in the strategy and frankly, we've just begun this journey on this intent-based networking and the first product we launched has shown that our customers are adopting that and we believe that will be critical to the future. >> chuck, i'm always interested in capital allocation. i'm curious, back to that announcement, last quarter, 25 billion in the share buyback you brought back 67 billion from overseas you said the next 18 to 21 months you'll be using that 25 billion. why was that the right number? you have 47 billion in the u.s. and how do you think of that number being the right number as opposed to the large or the smaller? >> david, right now we're thinking about the capital returns through a combination of buybacks as well as we increased the dividend last quarter so you can look at the magnitude of what it costs on an annual basis to service a dividend and we

want to be able to raise the dividend as we have been relative to our cash flow, and so we thought right now that's the right number, particularly over the window of time that kelly talked about on the last call and we'll continue to look at capital returns through buybacks and dividends and m and a opportunities that might be out there for us >> recurring revenue and they have a couple of questions on this some people had it at 32% and wondering what drove a declining quarter over quarter at least and it gets a higher multiple given it is reporting and can you give clarity in terms of what the expectations are with that >> the 32% was up two points year over year, but it was a rounding issue from last quarter to this quarter, frankly and here are two things that contributed to it. frankly the product business which everyone has wanted to see grow faster and it grew faster

than our services business and we had a very strong performance in our data center compute business which actually has a lower subscription rate associated with it, but if you look at the $5.6 billion that we have now in the balance sheet with the software and subscription we're quite pleased with that. the other thing we want to make sure is that these new devices like the catalyst 9300 accelerate, we built a subscription business on top of it what people need to remember is 20 to 25% of the order rate that we take on that product actually gets put into deferred revenue so we're pleased with where we are and we're happy with the momentum we have and we have a pipeline of inonvativation that us confidence for the future. >> what characteristics do your candidates need to have? >> well, hey, carl, i hope you're doing well. when we think about m and a

nothing's changed. we look for companies out there that have technology that either complements what we do today and gets us to an adjacent area relative to what we do today and gets us into a new market that we think our customers would benefit from in conjunction with our current portfolio. we're constantly scanning the landscape and our teams are working and we've done 24 acquisitions since i became ceo and we'll continue to look for opportunities where it makes sense. >> can i ask you a question, chuck. when you get up in the morning do you look at the networks or is that something, oh, my, i have to go up against this $18 billion dump it's going to be a bad day today? >> i actually don't wake up thinking about that, jim, but if you look at what we're focused on right now, and i think the big topic of discussion is the

campus networking space, and i think the announcement that we made last summer relative to our move into intent-based network and the leadership position that we established and the fact that that first product in the architecture and the automation platform that we built and the fastest-growing product in the history of the company it needs to be an architecture that not only encompasses switching and it encompasses wireless and routing and that's what the architecture does and we're quite comfortable where we are and where we're headed in that space. >> the two things that did concern me and one is that the dram was going to start coming down and they're still going the other way and that was just a bad prediction by you guys and do you feel that this is an adobe story or an ibm story. adobe crosses over with the subscription and everyone goes nuts you're not there yet

ibm crosses over 49 and nobody cares. tell me about where you are with dram and software and where you need to get before people realize that you're a different company? >> first of all, jim, i think kell owe the call said that the dram pricing was still a headwind, but it wasn't as bad as it was last quarter, but it's still a headwind for sure and we continue to monitor that and meet with the suppliers and do all of the things that we can to put ourselves in the best position possible. as it relates to comparing us to other software companies, i think the thing to remember is the transition we're going through is really not one that any other company has ever gone through because we're bringing together a software and subscription business with a hard wear business so if we were a pure software business, we can make a decision and move it on to the cloud and deliver a subscription, flip a switch >> in our case we have to continue to build the hardware we have pricing structures that

have hardware and the subscription on top and i would say that no one's really gone through a transition that looks exactly like ours and i'm pleased with the progress so far. >> speaking of transitions and we're going to run out of time ourselves after the transition and i had verizon and we were talking about 5 g and they were rolling it out later this year in sacramento and l.a. how are you going to be positioned for what that is going to mean particularly given, ot and all of the different networking that will take places as a result of lack of latency in 5 g? >> david, it's a great question and lowell and verizon are a great customer and partner for us look, what 5g is going to do is it will create incredible capabilities at the edge of the network they think he said are unprecedented in what they're going to make possible and that's going to create a tremendous bandwidth load on the

core networks and we've been talking about the service provider business for quite a while and one of the key things that we think could drive that business back into positive territory is the 5g buildout and if you look at congress this year, our customers are talking about, given that we believe that 5g is real and it's happening and you heard laurel and the architecture of the core network will have to evolve to accommodate that traffic and that's the key role that we'll play with, david. >> we need to see the service providers do something for the company and it hasn't happened lately and it's all to come. chuck, good to see you thank you very much for coming on "squawk on the street". >> thanks, guys. when we come back we'll get cramer's mad dash countdown to the opening bell and o mneore look at the pre-market on this thursday don't go away. the rhythm of the world. but to us, it's the pace of tomorrow.

with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow. with tripadvisor, finding your perfect hotel at the lowest price... is as easy as dates, deals, done! simply enter your destination and dates... and see all the hotels for your stay! tripadvisor searches over 200 booking sites... to show you the lowest prices... so you can get the best deal on the right hotel for you. dates, deals, done!

tripadvisor. visit tripadvisor.com when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today.

watching oil, as well. brent did hit 80 for the first time since 2014. we'll see how that hps oelr hurts various sectors today when the opening bell rings in about five minutes into retirement.

and market volatility isn't top of mind. that's because they have a shield annuity from brighthouse financial, 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. let's get to a mad dash in the countdown to the opening bell, two minutes from now where do you want to head? >> one of the most exciting companies that i have had on lately with mad money is ww, where people don't know lou big this franchise is and cnbc was reporting on a hollywood reporter story about the franchise smackdown and what they'll get. it is really driving the stock saying that if you look at the ultimate fight club and what they're getting as a comp and

then wwe for their product is going to get far more than people realize i like wwe both for its entertainment value and for its video games and hey, two interactive and another number with wwe, and it's the live programming that people want they want this and it will cost somebody a lot of money to get it. >> they were one of the firsts that were screaming. >> and they had their own subscription-based network. >> i know the guy that was instrumental in doing a lot of products for them and this thing sells and it sells world wide and it is an underrated franchise in part because of the snobs on wall street >> snobs on wall street. >> i heard that. >> i got it. >> including the person to the left of me who doesn't -- wwe, you didn't play that game when you were a kid >> all right. >> i don't >> whatever.

i don't play any games we're all just fort night. >> you covered people playing games on pbs. >> day and night >> david was talking to his kids about ownership structure and -- >> software. >> he came up repeatedly on the call last night and everyone is saying it's not a fortnight. >> there you can see in the bottom of the screen and on the big board it's they're celebrating an ipo, pluralsight an enterprise software company and we'll keep our eye on cisco today which looks like it might be a bit of a drag on the index at the open. >> the stock has done better than a lot of other companies and it's lumped in with these big lumbering, kind of slow growth oracles of the world and there are two companies and there's a faster growth software business which is good and then

the other business which is okay and 13 times free cash flow that is very inexpensive and the buyback is one of the most aggressive and you talk about, david, and the way they allocate capital and they obviously believe in themselves and i think you have to think about this for the way it looks and it's the right number and it was basically -- >> that was kind of the answer that a lot of people want to be able to give >> that's true >> by the way, take two interactive and i mentioned the stock was down eight and down seven as reported and redemption's coming and it was made, by the way in conjunction with nvidia because you had the user and the stock is now up gigantically and people who trade in the after market, please have your brain take it away from you so you make no mistakes >> with artificial intelligence, you can do that, right you can have your brain taken out of your head and then have it put back in for 9:30?

it's called machine learning when you say machine learning and that's taking the brain away and giving it to somebody else. >> take two is at levels we haven't seen this morning. journal's got a piece on wells fargo in which quoting sources they say people that handle a business in wholesale banking altered related to corporate customers and this is in 2017 and 2018, an interesting read. >> is that thenew well or the old well, when did they drop the line it was really good >> it is a new weld now. it was after this in 2018. >> and it was elevated by then i don't know >> the bank was trying to meet a deadline to comply with a consent order related to anti-money laundering controls

warren buffett, you still like it and that's the take away. there's been a lot of buying of wealth lately and you have the hedge funds that file and i always think you can put the second and i don't pay that much attention to it. >> our tell on whether or not if the chinese will be better or worse and it's up better than a percent today and the toshiba deal got approval. i used to call them mobcom and they consolidated. i have to find a new acronym. >> the japanese deal is positive for an american? >> well, because there's an american component of it. >> and that's a very good one, and generally, you'd take that as a positive. i don't know where things stand with zte, we haven't seen another tweet on that today.

unclear. >>. >> how about these reports and bloomberg does say that navarro will participate today. >> that was kind of a navarro smackdown. >> it was reporting on bad blood. >> yeah. just so people know, those who are familiar with navarro's view, navarro is concerned about the long-term view of what the chinese is doing to us and he's not really fixated on the tariffs as much as he's fixated on the idea that one day the chinese will be in control of a lot of our key infrastructure because of the way they play navarro, by the way, people get this 2025, plan, and the 2025 plan says world domination that's what they believe in. >> when dan d'amico tweets a

globalist. am i a goldman globalist no no i'm far more in the navarro camp because the 2025 document basically says that none of us will even have jobs. it's the takeaway american jobs which is what i think they did look, i was with dan on this when he was at nucor we were on this thing ten years ago when i was working with larry kudlow i had this view, and i don't think i'm new to this view, what's happening is we keep losing a lot of jobs, but at the same time i don't want our country to -- i don't want a giant trade war and navarro said we are in a giant trade war. >> and that's exactly what he says and i don't think he's off the mark i don't. >> it doesn't mean we have to detonate, and i think peter may be the guy who is out here and maybe the president brings it

back a little, but it's still better than what any other president has done when it comes to keeping our jobs. >> it's all about the president. >> i have to prepare for a faber report would you like to wade through all of this? do you want to spend your entire day trying to understand delaware law and bylaw >> it's -- >> and figure out what's really going to happen here >> i didn't go to law school to get stupid >> then you do it. >> do it >> my father always said you guys still like each other hey, do you still like david >> we should have a cramer report >> i'll give you all my notes. figure it out. >> i can't read your handwriting. that's true. i can't read it either, that's the problem. >> channel 2 or the drugs? >> let's start with the judge yesterday. remember, cbs' board of

directors had asked to issue a tro preventing and controlling shareholders of redstone's amusement from introducing new bylays and/or changing directors prior to a meeting scheduled for today at 5:00 p.m. when that said board plans to say we'll issue a dividend that is going to massively dilute you controlling shareholders from 80% to 17% by the way, while we will vote on that dividend, we won't actually issue it until we get court approval said court approval could be months from now. back to the tro itself yesterday there seemed to be some misinterpretation from the judge. judge bouchard said i'll enter a particular ro right now the minute i leave the bench to

protect my jurisdiction and tomorrow is today at some point. i've never seen anything quite like what transpired here in terms of moving to the tro, and i think i need to do it to protect my jurisdiction so i'm going to do that and then i'm going to let you know tomorrow whether i'm going to list it or not and where we go from here and that's what we're waiting for where we go from there don't think just because he said that that it means that he's necessarily going to issue a tro that is effective long term in tomorrows of preventing the controlling shareholder from doing what they want to do, and by the way, on that note, yesterday, as we reported it did change for written consent, the bylaws of cbs so that you would need a 90% vote of directors in order to issue said potential dividends. >> 90% will be tough because of the 14 directors and one is redstone and two others that are

fully aligned with her and therefore they can vote it down. it will be interesting to have that at 5:00, isn't it we'll have moonves in the room with redstone and i don't know if they're getting together or just doing it over the phone so many questions to answer here do we get a tro or not unclear, if we do, do they hold this meeting at 5:00 and disregard the bylaw change because cbs yesterday said the latest step provides further evidence of why we concluded and in order to protect the interest of all cbs shareholders and they think the nia actions are unlawful and they're confident in their position and they say we're ignoring your change in the bylaws controlling the shareholders and we'll vote to issue the dividends although again, we won't issue it until we get court approval to do so that could be months from now and that could be the original

complaint what they filed and we might not hear that for three months and that will appeal to the supreme court in delaware and maybe it's four months, but it's possible to have something unexpected today and tells us more than what we expect it will in term was whether or not the bylaw change that they put into effect that is effective or not. i know i haven't cleared up much of anything. what i can say is sherry redstone and leslie moonves don't seem to have an agreement in the future of the combined companies and she continues to be the controlling shareholder here and the question simply will be is there going to be a wi that she is allowed under the law or i should say krshs is under the law to vastly dilute her effective voting control many people say no eventually, you end up in the same place which is the movie ends but the directors and moonves gone, but that movie has a long way to play and it's

going to be great when you watch it on channel 2. i'm working on the screen play now. >> i have to say that jessica has seen the movie already and she correctly goes and it's too darn hard. >> i think it's just as fabulous >> she's just a very good -- she has three scenarios, the survivor scenario and the big bang scenario and the not so sure thing because she's always been clever and smart. i'm sure in les looked at this, he would say how did we get into this situation i just put up unbelievable numbers with march madness >> there were expectations on all sides that they would be able to figure something out even mr. moonves, i think, thought they would get somewhere, but something changed long the way and what i do notice in so many of these different situations is that

eventually you're dealing with personalities, ego and to quote, a failure to communicate 40% and the term upside if the team wins. >> the board argues that they feel is a far higher value stock. >> and we are going to get a little clarity today and when we get it we will try our best to explain to you what it means and we'll get to see what judge -- >> a common sense judge might just say the stocks should go up and people should benefit. >> that's happening down there >> yeah. >> wow we're all in over our heads, david. >> it's kind of like zoe in predator >> again with the predator, we're all going to die >> we're all going die >> that's a deep reference there. >> hopefully not any time soon walmart has gone red we'll keep our eye on that

coke, meantime, benefitting from a barclays update to overweight. ge up to 15 and he has a response tusso, a great j.p. morgan analyst who said this thing will go lower and has not been heard from in the last 24 hours saying anything bad about ge who acts as a great guy and he probably thinks i hate him and i didn't >> he has a great analysis and no stock in the industrial sector saw more institutional selling in q1 than ge. >> yes, they do. they have a very large position. >> i think ge is wanting a comeback because what's the one thing everybody talks about on the network? crude realities? what does that mean? crude realities? crude doesn't stop and ge has a play on oil when you're trying to sell baker hughes, a ge

company. who looks so damn good and it's the little thing >> it's the logo and that's what did it, david. >> the triple doubles don't mean much >> no. it's the first he's done in a while right there. >> and i have to tell you, cleveland has to have partner or something. >> the dow's down 85 let's get to bob pisani. >> the dollar is down overall and not a good sign for the market i get asked all of the time what's the impact of the geopolitical tensions and trade talks. take a look at maersk, one of the biggest shipping companies and their earnings had a big miss you know what happened geopolitical risks hurt them and trade tensions lowered the amount of shipping overall and there's your poster child about what happens when you have the

c combination going on, you'll be down a little bit so you've got semiconductors and banks lagging a bit and consumer staples which has been a laggard, and energy has been weak recently although in the last couple of months and walmart was good dillard's beat on the top and bottom line. they were okay macy's okay yesterday. children's place they missed on the earnings and comps and look at that down 9% j.c. penny also missed on comps and it's down, as well we're not done with earnings on the retailers and two things leap out at me and the first is bad weather cited by a lot of people children's place and jcpenney and home depot, dillard's didn't, it's hard to figure out, but they also, helping consumers was around a lot and dillard's said something about it and look

at the ceo with william t. dillard and we continue into the first quarter and we believe it will indicate our customer is more comfortable spending in this overallen vie environment that's a trend the stock market's not reacting to positive earnings news. it is reacting we have shown this chart many times, but the stock market ran up 15% in the fourth quarter anticipation of the earnings would be great this is the one-year chart and the bottom line, you know what that is? that's europe and the s&p 500 for europe european earnings have not been anywhere as good as the united states earnings and as a result europe has dramatically underperformed the united states for all of the year because the market's been annes ticipating e numbers. we're up 26% in earnings look at that europe's up 3.7, 10% of the

earnings growth we've had and the revenues aren't any good either and the revenues are basically flat in europe we're up 8% and ten times better than europe and the market has reacted. the united states is up 16%, 17% in the s&p 500 so folks, the stock market does react to better earnings and they do it in anticipation before the analyst comes out and by the way, retail is the same thing ging into the first part of january and the overall retail group and they're expected to be up 6% you see the move up and the whole retail complex moved up in the third quarter and in anticipation the number will be better and it moved up 15% and it's done fine and they moved up and now that the quarter is over they'll try to figure out where they'll get more juice going forward. >> let me show you the ipo here and the enterprise software is really hot we're waiting for this to hope in the plural sight and they do

education and we'll see it open about 10:30 and the enterprise software stocks have done great and carbon black, smart sheets, look at that for the wrer. hot space right now. we're down 85 points on the dow. carl, back to you. >> thank you, bob. >> bob pisani. let's get to rick santelli at the cme group in chicago who brought us the philly fed not that long ago. >> the delay was strong as was new orders we'll talk more about that as the day moves on two-year note yields and they keep on marching on, but you do see we're flattening out just a little bit and the old two steps in this case, two steps forward, two steps back one week of 30 and that's where all of the gold is on the treasury curve the last 24 hours and the long end just spacing out the curve and anything over 322 is new territory going back on a closing basis, but probably

to around july of 2015, if you look atti year to date chart in february we are right now sitting on it and all of what i'm talking about regarding where it closes is the significant aspect of that 322 and we yond. they get buffetted from a lot of different area, and italy, one in particular, but it's regained some of the ground, but despite that, our long end not only is spacing out giving the fed potentially more room for tightening so they don't invert the curve and it's affecting tens minus booms which just a couple of sessions ago was at 2.50 and you can see it's at 2.47 and if we look at tens minus twos the spacing is opening up we're 52 just think about this, on thursday it was 43 that's a yield curve they're not supposed to move

that much. finally, the dollar index from december, you can see it continues to build on what looks like a new high close going back to december. carl, jim, david, back to you. >> rick santelli coming up, worth monitoring dow is down 8 to start this thursday starting a business is expensive. that's why many entrepreneurs rely on their own personal property, like their car or home computer, to help them do their work. but they might not know that those items may need special insurance to protect against costly damage, theft,

or liability on the job. trusted choice independent insurance agents represent multiple insurance companies and customize coverage so business owners can focus on business. announcer: to find an agent, visit trustedchoice.com show of hands. let's get started. who wants customizable options chains? ones that make it fast and easy to analyze and take action? how about some of the lowest options fees? are you raising your hand? good then it's time for power e*trade the platform, price and service that gives you the edge you need. alright one quick game of rock, paper, scissors. 1, 2, 3, go. e*trade. the original place to invest online. just another day on the farm. or is it? this farmer's morning starts in outer space. where satellites feed infrared images of his land into a system built with ai. he uses watson to analyze his data

with millions of weather forecasts from the cloud, and iot sensors down here, for precise monitoring of irrigation. it's a smart way to help increase yields, all before the rest of us get out of bed. ♪ how do you know you made the right call... ...you just do. the light beer you've been waiting for has arrived. lower carbs. lower calories. higher expectations. corona premier.

walmart beats on earnings but slips at the open. that along can cisco helping to push the dow red in the early parts of theesonown ssi d63 we'll get trading with jim in just a moment. atta, boy. & yes, some people assign genders to machines. & with edge-to-edge intelligence, you'll know your customers love this color, & don't love this one. never getting grape again. & you can adjust in near real time. & if someone tries to breach your firewall in london

& you start to panic... don't. you've got allies on the outside, & security algorithms on the inside. & if it's jammed up here, & it's hot in here. & you know both those things, you can do this. & your flowers won't wilt. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & when her patient's blood pressure drops, she can share the information with...

sure. mom,what's up son?alk? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom?

you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us." that's a good one. [ chuckles ] download the xfinity my account app and set a password you can easily remember. one more way comcast is working to fit into your life, not the other way around. let's get to jim and stock trading. >> i have to tell you when i look at this news that's under cover about wholesale, go back over the release of when janet yellen's really kind of put the clamps on. they said if this continues, we are going to keep them capped at a certain level of growth. so i understand that they also made seeeach board member had to sign a letter about this so it's a little more significant because they will keep the lid on the growth here.

i thought they had gotten everything right >> we have a blastics company that's killing it. then i got to go there cap pit growth guess what they grow cannabis that is a growth market. i'm going there. >> if it's good enough for gene simmons. >> i know. i was going to have him on but i don't want to be a pot show. >> we'll see yout 00.m e rm c on the company's earnings in a minute d manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities - trade confirmed - and i have global access 24/7.

meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you.

i'm not really a, i thought wall street guy.ns. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st.

hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade welcome back to kwauk kwauk. we have some more breaking news. our lead on economic indicators and it is out exactly matching expectations up 04 of 1% it now stands at .4. this series of numbers never a trader's favorite, but it's pretty firm. keep in mind october we had a

1.3 read that was the best since 2010 so the numbers aren't at their loftiest, but they are solid we continue to look at the long end spacing and steeping it and selling pressure, pushing it to some levels in the case of the 30-year bond we haven't seen since 2015 back to you. >> good thursday morning welcome back to "squawk on the street." the dou the dow is down 53 some call @ unofficial end of earnings season. we begin with walmart versus amazon the company reports earnings last night beats on revenue. top line, bottom line and comps. this aggressive push into online sales but sales are down in early trading. >> and grocery wars, the second biggest groesher partnering with a uk retail tore tackle online

deliveries energy markets a bit rattled by supply worries out of iran >> let's start with walmart. shares moving lower this morning despite beatings expectations. the company reporting pretty strong digital growth. sales growing 33%. the dow components still down more than 10% for the year for more let's bring in the retail analyst at deutsche bank and oliver chen. a power pair of retail analysts. u.s. comp store sales came in a bit light. there were some parts of the margins as well to complain about. >> i agree i think as you mentioned, it was an overall decent relative to the bottom line forecast but we did have some concerns. overall comp slows on a two-year basis. the implied in store comp in

particular it's what's slowed given that the e-commerce business is contributing half of the comp growth. at this juncture, we also have expenses that are deleveraging and that likely is to continue given all of the e-commerce investments they are making. and so i think those are the key items of focus this morning that investors are looking at and the reason why the stock is probably a little soft. >> does it do anything to change your overall thesis on the long-term for walmart? >> not a material change in our view or walmart. we are trual weighted. it's continued to execute very well strategically it's improved over the last few years including substantial strategic action outside of the u.s.

but ultimately this was an extensive stock. and earnings are on the decline. especially given this flip card deal so it's difficult for us to be positive on the name we simply think the evaluation is stretched >> take the other side of that bet. you have to outperform at a price target on walmart you don't think it's expensive >> we think the future of retail is really emerging physical and digital. so there's 4800 locations. 90% of america is within ten miles of a walmart what walmart is doing is transform how people shop. they have curb side pickup at 2100 locations 800 locations will have delivery and 700 will have automated tower. the future of retail is merging and giving customers lots of options on how to shop et we think walmart is well positioned to do this. there's no doubt it's a very promotional environment there. it has been impacting gross

margins. however, being part of the biggest retailer, the biggest grocer, that's a nice positive in the battle versus amazon and the battle for the consumers' dollars given such a discounting environment. we like the global story and the dividend story we also like the return of capital. >> the global story, the fight is on for international e-commerce walmart made a big statement with the $16 billion takeover of flip card. investors seem to hate it. why the disconnect >> go ahead, oliver. >> there's eps dill lugs this year and next year it's a loss making business. but what we think is really the payments ecosystem as well as the industry that is significant. so if they want to be a major global power over the long-term, they needed to do this deal and it's also a very aggressive

competitive mood versus amazon think about walmart and the real transformation of customer sin tristy and what that means globally and what they can do with health care as well we really see walmart as an important force in consumers' lives and running a company that's customer centric. >> our response is simply that this business while it could create value long-term, it's going to lose a lot of money flip card, for a number of years. over 70% of the business is in the u.s. this is an allocation of capital and resources away from that core part of the business. ultimately, you have a lot of competitors that while walmart is ahead of the curve, there's catch up in terms of same-day delivery, and they need to really focus on the u.s. market. >> so we had this discussion when flip card was announced

the thinking among some at the time was the international game is younger so there's more of a chance to catch up than it is domestically do you not agree with that >> i think that if walmart's strategy is to be a global player, this makes a lot of strategic sense. india is a gigantic market and will only continue to showcase better than average growth that said, i think that the real risk to walmart's shareholders is an environment in which walmart shares domestically in a manner in which others can did over time in the uk to players like aldes so the domestic market is the most important piece of this story. >> before we go, it's one of sara's favorites you mentioned kroger it's up a lot more than walmart. it's only 6%

why is it really important >> i think that traditional grocery is a very difficult sector they have been seeding share to a number of players from dollar stores to amazon and others. right here, kroger put a stake in the ground and said we're dpoing to make sure that we're convenient we're going to make sure we're relevant for the long-term it's probably going to be quite controversial and margins near term, but kudos to them for thinking about the big picture >> i have done some work on it two words. it's automated warehouses. this is what the company does well president uk is so far ahead of the u.s. in terms of online grocery delivery this is an exclusive partnership. and it means that it's going to take awhile. in two years, it's going to give kroger a leg up. it's going to take awhile. and amazon already has those

warehouses in store. final question to you. i'll bring up another stock moverer, which is jcpenney on falling sales, cutting earnings guidance what a stark contrast from macy's esterday. >> what we have really seen in the retail sector is cooler weather has been a factor. as you know, we have been more bar. ish on apparel as a sector apparel has been deflation nar so different kinds of trends, but there are cross currents walmart called out cooler weather as an unseasonably cool issue affecting april traffic negatively and i think you're right about grocery and the future of grocery. it's a lot about supply chain automation and the customer wins the customer will be able to shop in new ways that they haven't been able to shop before car pickup using ship to target. a lot of factors >> i think it's wide open. nobody is winning the online grocery right now. that's a big story thank you.

when we come back, oil prices are up hitting the highest level since 2014 as the supply concerns continue to weigh on the market we'll talk more about walmart's e-commerce push and whether it's paying off the former ceo of walmart will join us live when "squawk on the street" continues in a moment.

stocks are mixed this morning. we're on track for another negative week on the dow got these geopolitical tensions continuing to weigh on the market let's bring in the chief equity strategist at citi good morning, good to see you both up until week ask a half, the bears were pointing to trade concerns and the curve and gas prices and some soft survey data how important are those to you right now? >> not at all. a lot of people are focusing on interest rates actually the most important news that we saw in the markets came out last tuesday at 2:00 while trump was pulling out of

the iran aaccord it was from the federal reserve board showing credit conditions. essentially saying it's cheaper for businesses to go out and grow money and invest in their businesses it's been an indicator for activity all the stuff you want to see and things people have been worried about is channelled my inner spice girl and >> i have an inner spice girl. >> which one is the question >> investors really want to have some conviction about the latter part of this year. and the credit data is actually very positive. and people are still struggling with things like talking about trade. >> do you think we can build that kind of conviction going into the summer at least >> we would say, yes, you can. we saw really strong revenue growth and really strong margin

expansion. now admittedly a third of the shares came from taxes we think you can the one thing we're watching that i would add to what was said is that we're watching what's happening with the dollar because we still are concern ed that if you have a combination of rising interest rates and a sharply rising dollar, without a big pickup in productivity and real economic growth, you can get a tightening of financial conditions globally because the u.s. dollar is still the reserve currency we saw the sharply rising dollar a few years ago. as long as it's relatively stable and rates going up, we think earnings and the economy will be fine >> and the dollar is breaking out. we're past five-month mihighs. we have started to see what kind of havoc it's having on emerging markets. does that scare you? >> emerging markets are clearly more sensitive to the dollar movement but if you look at the dollar move, for every 1% movement, you

get 25 cents of impact on the s&p 500. so let's assume that we go 10% on the dollar. that would be $2.50 on what is right now consensus numbers. at the march in bad news, but not devastating. it's not just earnings it's exports >> it takes a little longer for that to occur in the economy you have usually signed up for a year or two on supply contracts. so you don't lose the competitiveness right away plus companies can do a little in terms of reorganizing where they produce goods but to be fair, it would be a negative we're not looking for really great year we're looking for up 5 or 6% not 20%. that would be another reason >> what about the index of small caps hitting a record high what sort of indicator for you where the other major averages are not. >> it's sort of indicates that

there's increasing conviction at least from investors about what's going on in the u.s. economy because the small cap index is much more domestically focused in terms of the percentage of revenues that come from the u.s so to the extent that you're seeing small cap outperform large cap, it's an indication that investors are increasingly confident about the durability of this economic growth and that while we may be in the later earnings, probably not at ninth inning >> i forget who it was yesterday said we're in the second inning. >> i think hockey terms. it's the third period. let's put it that way. i don't think it's the first period >> how many periods are there? >> three >> come on >> the ohio comes out. the one thing i would say is the dollar also is is having an

impact on that kind of on the small cap and large cap aspect as well. when the dollar was weakening in large cap space, that's another reason >> what about the response to a fairly strong earnings season. the journal points out that's not indicative in any way. it's the opposite. stocksen don't perform particularly well off a strong ea earnings season is >> we were getting lots of questions about that we're still from the investors in the u.s number one, people expected earnings to beat expectations. so what we used to call the whisper numbers were higher. number two, the guidance most of the raises were for the first quarter. because people weren't thinking $70 oil. and the third is they want that guidance to the latter part of the year they don't have the visibility and lawyers are probably telling

them don't go out and promise something we can't deliver >> demarcation lines, we mentioned currencies what is it for the ten year? >> 10 year probably right now where it is around 3.1% think it's fine. if it goes up to 3.5, we would start to worry that not just from the real effect it might have from higher costs and slightly tighter financial conditions, but psychological just in the sense. we saw earlier in the year we had an inflation scare the end of january and early february. rates started going up we saw a lot of volatility in the market i think the bigger impact would be the market opposed to the economy. so demarcation line, i think it's more worrying for the market that it makes investors

jittery. >> gentlemen, good stuff good to see you both >> thank you >> we have had some tough trade talks between china and the u.s. the premier is in washington he's meeting with the commerce secretary. let's get to d.c. to tell us what is going on >> led by secretarymy nugs the administration's china hawk will not be taking part in the meetings despite saying he had successfully fought his way into the delegation now in an episode during two weeks ago during talks in beijing, he interrupted a lebty diatribe saying as paraphrased we don't need a bleep iing histr lesson a source familiar with the

discussions said he disagrees with the lone ranger negotiating strategy that excludes other official viewpoints and this source also denied the beijing episode calling it part of a coordinated campaign by the team so while the u.s. team works out its percesonnel questions, chin has brought more than a dozen of its highest ranking government officials according to a list obtained by cnbc and includes those managing at central bank and sell come industry that group began its tour yesterday on capitol hill meeting with a small group of house weighs and means members the chair of the senate finance committee, who after the meeting said despite opposing tariffs, he thinks the u.s. should go through with them to keep up the pressure object china. >> they are talking about it i suspect that it is going to happen because i'm not sure that we have any guarantee by china they are going to be fair to us.

>> talks with the chinese are expected to go through saturday. and the director told reporters this morning that president trump will be meeting at the white house this afternoon with china's vice premier we'll see what happens then. >> it's such good inside color and pretty juicy especially the navorro stuff the fact that they wrote the book death by china and called china a global pollution factory and a disease incubator is not on the front lines of discussion is that good for people. he still has strong viewpoints and a direct line into president trump to make those views known. and he could very well make them known to the president this week when he hears about what deal, if any, is coalescing. it's true that at least two time oefrs the last year the navorro nationalist camp did

successfully convince the president to thwart deals with the chinese that had been struck by secretary last july and october. so not having him in the room could potentially mean a deal is more likely. although he knows how to reach the president and his views are very well known. >> thank you on trade concerns over iran's exports causing oil prices to surge. the international benchmark at $80. how high could oil go from here? polk county is one of the counties that you don't think about very much. it's really not very important. i was in the stone ages as much as technology wise. and i would say i had nothing. you become a school teacher for one reason,

you love kids. and so you don't have the same tools, you don't always believe you have the same... outcomes achievable for yourself. when we got the tablets, it changed everything. by giving them that technology and then marrying it with a curriculum that's designed to have technology at the heart of it, we are really changing the way that students learn. and i can't wait for ten years from now when i get to talk to them again and see, like, who they are. ♪

it's abor it isn't. ence in 30,000 precision parts. it's inspected by mercedes-benz factory-trained technicians. or it isn't. it's backed by an unlimited mileage warranty, or it isn't. for those who never settle, it's either mercedes-benz certified pre-owned, or it isn't. the mercedes-benz certified pre-owned sales event. now through may 31st. only at your authorized mercedes-benz dealer.

a three-year high. jackie has a look at the energy sector on pace for the 10th straight day of gains. brent breaking 80. hitting a session high over $72

a barrel it hasn't seen that level since 2014 this is certainly boosting stocks and the sector. the s&p 500 up about 15% quarter to date because of these higher prices the etf is moving this morning year to date they are sigh seething high gains. that's because of the moves we have seen in prices. on pace for ten straight days of gains. it's the first time since 2005 and the thought is this is going to continue. geopolitical threats loom and we're haeding into the season for oil. demand picks up and so do prices heading into july. analysts think breaking $80, wti would do the same. ta warned of that yesterday. margins are higher

but the flip side is the company is using oil as an input like the airlines, truckers and the like they are going to have a harder time the consumer is going to feel it too. we're not even at et memorial day and gas prices have been rising aaa has the national average ats $2.90. that's 56 cents higher than it was this time last year. >> thank you for more on energy, let's bring in another contributor $80 a barrel >> i don't think we'll et get to $100, but it's within the realm of possibilities depending on how things go in the middle east i'll tell you now there's relative calm. the iranians have walked back from the conflict they had with israel and syria so if things we're all holding our breath as to what the next shoe is to drop. when the commodity gets on a run, i like itten it to a championship team destined to

win the championship the guy at the end of the bench sinks a three-pointer. or we'll have a hurricane early. we're in one of those channels right now. it's going to be a bolt out of the blue that gets us to the next couple dollars. >> the fact that the oil is rising, they move in opposite directions is that more bullish >> it speaks to the strong fundamental picture we're dealing with and the technicals. all the stars are aligned for this bull run we have been in. you have strong fundamentals and a strong global economy. you have strong technicals what i measure sentiment very bullish. it has been for weeks. and this category of global situational inputs, middle east, you name it. it's across the board green lights >> we were talking during the break about a correlation with currencies why is there not a strong dollar ceiling on crude

>> arguably, it has kept the lid on what might have been more spectacular gains than we have already seen it's been a moderate pace as we cross the $70 a barrel mark. we saw consolidation we had had trouble get iting towards the level. there's going to be more to come >> potential supply losses from iran and venezuela seems to be the focus of the market. can shale make that up >> no, unfortunately as much as they are trying what you're seeing is the problem in the price the texas price for that shale oil is almost $20 less than the brent marker because they can't get it to market so it's being pumped there it's being stored there. not at a choice but necessity. there's not enough pipeline. if they could get people to carry to the coast with buckets, they would at this point but it's not there yet, but they are going to try the real catalyst for this has

been president trump would bob and weave over the nuclear deal and all that he's come out and give them a right cross to the side of the head here with slapping the sanctions back on. and now doing every little extra thing they can at this moment. like slapping personal sanctions on the iran bank so they are leaning forward on this whole situation that's what the oil market is reacting to. >> the europeans are starting to back away from financial transactions in iran knowing the secondary sanctions. so is it months or years where are we on pipelines in terms of dealing with what is is a glut of production that's going to sit >> it's pretty much on site. and they are trying to truck it out to the ship channel area as fast as they can. the numbers are there. you see the numbers growing. the pipeline aspects are probably given the price environment we're in, it's going

to speed up. most estimates were for later this year. maybe see it september and october. they are going to throw everything they can at it. that's the issue >> 10 million? >> 10.7. i think we'll be at 11 now by september at the rate we're going. there was a huge surge in permits granted by the texas railroad commission. thousands, over a thousand more. and we're up 45% in rigs in that area year on year. >> really quick. you were not this bullish early in the year. what switched? >> president trump and his very aggressive posture towards iran. and also using the financial levers we have not allowing insurance on the tankers and things like that are really going to impede the ability of others. who otherwise might have done so there's a debate that the europeans and others would have taken the oil. they are not going to be able

to and secondly the crash in venezuela has been remarkable. almost heartbreaking to see such a crown jewel of a state run oil company. >> wti at $72 a barrel thank you. 32 past the hour let's get a news update back at hq >> good morning, everyone. here's what's happening at this hour israeli prime minister benjamin netanyahu meeting with the president in jerusalem he says that israel's security and intelligence services have prevented terrorist attacks in more than 30 countries including the downing of an aircraft >> we have a common battle to fight terrorism and to fight the spons sponsors of terrorism. we are doing it in the middle east, but it encompasses the entire world but today we have prevented such catastrophes by sharing our intelligence with other countries. >> in a statement put out by

kensington palace, meghan markle says her father will not be attending her wedding. it puts to rest speculation whether he would walk her down the aisle. a new york city lawyer went on ab expletive racist rant after hearing a few words of spanish in a local restaurant. he threatened to call federal immigration officials because workers failed to speak english in his presence. he was identified after a bystander posted the video on the internet you are up to date back downtown to you >> thank you and when we come back, walmart lower after starting the morning in the green what's behind the u-turn in the stock. former ceo of the u.s. bill p simon joins us next. and a quick check on stocks at this hour we have a small rally. the s&p is being led by energy stocks on strong crude oil prices

'lbeig bk. up 22 wel rhtac

welcome back to "squawk on the street." live from post 9 at the new york stock exchange an hour into trading and we're seeing green across the major averages it's up the most we're looking at a quarter of a percentage point gains >> fuelled in part by double digit growth and e-commerce. the retail giant competing against amazon in the battle for online dollars

>> it's good to have you back. >> we had a discussion the day the flip card deal was done. we're left about the debate about whether they should be look at international is taking some oxygen away from domestic >> i think the results are gad indicator of watts going on in the economy. the store settingment is doing very well. they had a sales growth and leveraged expenses in the stores that was offset by really serious and massive investments in e-commerce in the u.s so the company delevered if you think about it, one of the reasons they are in the red today is they added $5 billion roughly in sales for the quarter.

they want to know where this is going. >> how is that possible. it's comparable inventory. it's a positive story. >> i think the answer is when you do a deal like they did over the last couple weeks, they bought flip cart it loses a billion and a half. they will have a $2.a billion in operating income just on that deal alone that might be causing concerns to give them credit, they are doing what they said they were going to do. they are doing it very well. i think it's going to take time to play out. if you like that story, you should be happy with the result. if you're not, if you're about profit and operating income, you might have some concerns

>> who is winning the online for grocery. they mentioned digital growth. kroger announcing the deal for the licensing agreement today. and the amazon whole foods question what happens to this huge potential market >> it's a great question i think one of the things you have to keep in mind is that e-commerce and digital penetration of food is still very, very low and most of the business is going to be still in physical stores for years and years to come so you can fight that battle, but it's only for 5% to 10% of the grocery segment. and you can fight that battle and it could damage the other 90% of the business. i think what we're seeing in results today, the physical stores are doing very well

growing same store sales and leveraging expenses. the e-commerce is a serious investment i think the answer in how this is going to turn out is not written. that battle now by kroger and others is very intense it's going to put pressure on operating margins for awhile >> but by the way, the stock market judges things amazon always has the advantage there because nobody has expectations they are going to be profitable. >> exactly amazon has revolutionized how we invest somehow hyper active growth with very, very baseline to zero profit growth is is okay that has to play out at some stage. there has to be a solution to that otherwise walmart should trade all their operating income for growth and go from a $30 billion.

income company to $2 or $3 billion and they would trade at a 300 times multiple i think as much as amazon has chapged the way we shop, it's changed the way some investors are locking at what good is now. >> some call it a call option on growth rather than valuation of discounted cash flow it's just the way companies are being measured these days. you think amazon is predatory here >> i think what amazon is doing and i don't believe this is intentional. i think what they are doing is trying to use the velocity and traffic that comes with the retail business to parlay that into a growth story. and as long as the street continues to reward amazon for the behaviors that they are doing, they will continue to do it they are being rewarded mightily they are trading at the gold b stock. i thought they were overvalued

at $400 and now they are four times that and as long as investors keep buying the stock at that level based on that hyper active growth story, they are going to keep playing in that direction the end result is they are making money on web services and advertising and other areas and selling below cost in retail at some point, that's going to feel like a problem. >> but is there a way to adjust the lens of anti-trust in this country to aim it at a player that bring s about disinflation, but as you say subsidizes one business with another and ends up harming enterprise in some way you say the market rewards them. but should policy punish them? >> i think the policy discussion is one that makes sure that investors have a clear view of what's happening and that if web services traded

separately, it would be a very profitable business on a very low capital base if the retail business at amazon traded separately from web services, it would be a high growth but money losing operation. as long as investors know that when they are going into the play, i think fair is fair and regulators ought to stay clear. but my question is do people know that or are they accepting or know it >> i wanted to ask you about jcpenney another dismal earnings report they can't blame amazon after we saw from macy's, which is showing growth again what happens to jcpenney >> i think jc penny as sad is a shell of what it formerly was. there's some good people over there and some friends but that business is in a lot of trouble. i don't know it recovers

>> you don't know that it recovers >> i don't think -- it's going to be very difficult their real estate is not great the mall traffic is down generally speaking and their brand has been tarnished. they don't sell anything that anybody else doesn't sell and does a better job at it. they have their work cut out for them >> bill, your insight is truly valuable to a will the of other viewers. we appreciate your time today covering all kinds of topics bill simon, we'll see you soon i hope when we come back, will tesla need to raise more money this year take a look at the markets dow is up 50 we have a new high on the russell. back in a minute ♪

feel that? that's the beat of global markets, the rhythm of the world. but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow. when it comes to travel, i sweat the details. late checkout... ...down-alternative pillows... ...and of course, price. tripadvisor helps you book a... ...hotel without breaking a sweat. because we now instantly... ...search over 200 booking sites ...to find you the lowest price... ...on the hotel you want.

don't sweat your booking. tripadvisor. the latest reviews. the lowest prices.

oil hitting a fresh multiyear high today there's a strange market anomaly us that could point to an even bigger bakt.reou find out what that is is trading nation, more "squawk on the street" coming right up. welcome to holiday inn! thank you! ♪ ♪ wait, i have something for you! every stay is a special stay at holiday inn. save up to 15% when you book early at hollidayinn.com

welcome back to "squawk on the street." i'd like to welcome my guest today. jerry o'driscoll, thank you for joining me >> thank you for very me on. >> our central bank probably waited way too long, but they are on the right track they are in quantitative tightening mode. it's a slow start but it will build. we have six rate hikes in our pocket bringing the rate to 150 to 175. many are discussing where will the terminal rate be where everything is work iing out perfect. versus the terminal rate where

it will end up many believe they should be the same what are your thoughts >> well, i agree with the former vice chairman of the fed they don't really know where they are they think they international issues outside the u.s., bank of japan, bank of england, their actions will be our actions. we will all share each other's pros and cons regarding removal of all this stimulus since the great recession. i don't have a lot of

confidence your thought >> i agree with you. we're raising rates on the theory that this gives them room to raise rates but they don't seem to be ready to do that. i don't see how the doj can do it dragi is being hesitant. >> if they continue to do delay -- i know this is a what if type of equation and they're difficult but what ramifications should u.s. investors feel will our markets look for much more capital coming in because the other central banks are up to the task at hand or will it be the type of chaos that no market in any country will like? >> i think the best guess is that it will attract more capital. everything we're doing is in attracting more capital and the only downside i see is if a trade war really breaks out but i don't think it will. >> excellent i know that you've always been fascinated by trade and i don't want to get into the nitty

gritty but it certainly seems, me being a market guy, that worst case scenarios are priced in we're almost out of time any news beyond trade at this point might just be bullish markets. your final thought >> yes i think markets have priced in the downside and the next move is, wow, relief. >> excellent jerry, always a pleasure talking to you david faber, all yours. >> thank you, rick rick santelli. time to send it over to jon fortt for a look at what's coming up on "squawk alley." jon? >> premium music and video being tweaked again. now youtube premium. youtube music is out what does that mean for google play music we'll sort it all out and try to figure out what's going on with music and video subscription next on "squawk alley.

there was an idea. to bring together a group of remarkable people. to help save the universe... from paying too much on their car insurance. hey, there's cake in the breakroom... what are you doing? um...nothing? marvel studios' avengers: infinity war, in theaters april 27th. now...where were we?

take a look at shares of tesla moving higher. needing to raise money in the next 18 months we've seen tesla potentially requiring over $10 billion by 2020.

on the heels of s.e.c. filing showing george soros has taken stake. bonds have lost 15% of their value since the summer and goldman does reiterate their long-term sell on tesla. when we come back, what insta gram is doing for social media addicts. it's good for mental health but is it good for business? people don't invest in stocks and bonds.

they don't invest in alternatives or municipal strategies. what people really invest in is what they hope to get out of life.

but helping them get there means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more. good morning it's 10:00 a.m. at walmart headquarters in arkansas and it's 11:00 a.m. on wall street and "squawk alley" is live. ♪

♪ busy morning lot to get to today. first up, walmart is out with an earnings beat, fueled with growth by the e-commerce division now in the red this follows the acquisition of flipkart all with the amazon effect on retail professor nyu school of business and "new york times" best selling author as well as jason cowakanis of insider.com we just talked to bill simon, former u.s. chief of walmart and talked about the question about whether or not amazon's behavior is predatory on othe