>> they're office paintnts, the are. as we mentioned, the futures improved throughout the morning. down by 100 points at one moment now indicated up by about ten points s&p futures indicated up by just under a point. the nasdaq up by 7 again everything turned positive thank you for being here today. >> pleasure as always. >> good to see you see you back here tomorrow right now it is time for "squawk on the street. ♪ let's get it started let's get it started in here ♪ ♪ let's get it started good morning, and welcome to "squawk on the street. i'm david faber with jim cramer. we're live from the new york stock exchange carl is off. let's give you a look at futures. we get started with trading half hour from now. right here at the new york stock exchange like to point that out, people don't seem to know we do the show from here it is amazing to me. road map does start though with shares of southwest. they're sliding this morning the airline cutting revenue outlook as a result of the boeing 737 max groundings.

this as congress prepares to grill federal regulators about that aircraft's safety approval process. plus, musk versus the s.e.c. tesla's ceo is set to make his case in court next week. he hasn't violated the settlement deal he entered into with the s.e.c. last year. and we got almost a megadeal in health care large deal. >> i think it is mega. >> centene buying wellcare it is going to create a giant in the aca market to the extent that is still going to exist we'll see. jim and i will talk about that, a lot of different aspects to it you'll see both stocks moving sharply. shares of southwest, what they're doing this morning is falling. the airline cutting its first quarter forecast for revenue per available seat mile, citing the grounding of its boeing 737 max jets as well, there is going to be hearing on capitol hill today

regarding airline safety, that in the wake of two fatal crashes involving boeing 737 max jets. the senate commerce subcommittee on aviation and space will look at the safety of the commercial air transportation system. and ways that it can be improved most likely also going to look at the somewhat controversial at least one that a lot of people aren't aware of, jim, where boeing employees are a part of the inspection process or the approval process many reasons why boeing says that's fine. but it was a bit of a surprise, i think, to some people who may not have been as familiar with that change that took place. >> did seem, i don't know, ill advised. >> perhaps >> southwest air, david, has been snake bit there have been so many things that have gone wrong and yet can i just say that the stock is still hanging in somewhat

gingerly because people think warren buffett will buy that despite what we know about warren buffett's airline dalliance. >> i remember it well. it didn't go well. he said i would never invest in another airline. >> i don't think -- >> i'm trying to remember. that was usair, right? >> right. >> julian robertson also -- >> that was a grim reaper. this is not their fault. they have a huge number of maxes coming to them but if you pay up for the safety, i think that people feel that it is, i don't hear anyone saying that the change is bad. change might take the place of what the problem is. >> that would be a good thing. without a doubt. what do you do about southwest today? in the premarket, not looking down that much, but -- >> people are saying this is going to be okay i think it should be down a

couple more. i say that, why do i say that? it is up 5% for the year >> right. >> should it be up given what has happened to it? the only one that has been terrific is united airlines. a lot of that is -- it is coming down this group is awful, back to 67 pe again it is almost in taylor brands territory. you're going to like the way you lose money >> what about boeing itself? today they're flying pilots or flown some pilots to seattle to continue to train them on the new software for the 737 max another step along the way here in terms of trying to get everybody up to speed. >> i still have not seen a forecast cut i've not seen that that's what's going to -- that drives the stock there has been no forecast cut i can see why analysts are anxious to recommend the stock

still looked very big. this is another one. safety worries, and it is just -- it just doesn't come in. maybe the wave of ipos, but 15% for the year there are companies that will kill to be up 15%. >> i know. >> boeing is a horse people want to buy the stock so badly. >> do they why is that? >> they have a backlog for 20 years. >> no longer for the 747 max. >> am i recommending it? i would like to see -- let it come in. there is no hurry to own boeing. what is going to happen tomorrow >> you get a hearing as well it is not going to be -- >> dennis muilenburg, i would love him to come on. let him tell his story. >> you got to be -- when you're

in this position, you got to be ready to answer the tough questions. >> other than greg case. >> what about greg case? >> he would come on now in the middle of a storm -- >> he'll tell you whatever it is he knows and he'll be straightforward. >> now the ledger can't talk because they're trying to get the deal done what about greg hayes makes a fabulous terrific guy who is confident and would come on tv. >> that's true not that muilenburg isn't all of those things, but you'll be advised by communications professionals not to sit down. >> we should move on that's just neither here nor there. >> it isn't. a little background on the way the corporations think about communicating. speaking of communicating, elon musk has a court date, squaring off against the s.e.c. on april 4th, in manhattan federal court. this is the commission tries to hold him in contempt of court for his tweets on the automaker's production levels. musk insists his tweets were not

improper >> well, if that's the case, why do you think that the judge nathan just kind of -- wants to meet him i regarded this as somewhat negative for elon because you're called in bit judge, and you're not going to be called in to get the congressional medal of tweeting >> no, you're not. now the chairman of the company continues to say, no, wisely is the word she used, uses twitter widely. >> very prudent and wise >> yes >> that's a suboptimal view of the situation. her view raises eyebrows my eyebrows are raised by that >> what i find so interesting, jim, is just how much emotion is around this particular company and this particular man. you and i sit here and in some way i guess you call it defend him the other day. i was talking about -- talking about thomas edison and what a promoter he was and the amount

of vitriol on twitter for saying anything and if you go the other way and say anything derogatory about the prospects for the company, it is also so much passion on both sides of this, those that were short the stock waiting saying this business model is going to fail and those who believe it is the greatest single company on earth. >> so binary he attacked -- he and i had various ride posts, it was about -- i say if he's not careful, she could criminalize it if he's not -- doesn't throw himself on the mercy of the court, judge nathan could make it difficult, distinguished jurist for that, elon came on and he did a little -- he battled me a little he battled me. >> that's all right. >> just kind of, wow he doesn't suffer fools gladly because i know you told me when i described what he said about me, he made me look foolish. that's when he said i was a

simulation, not a person. >> he doesn't suffer fools gladly at all. >> i like the guy. >> there are conference calls in which he questions the people on the call, in other words, you know, he's got various advisers and he asks them basic questions about aeronautics and if they can't answer them, for example, how does a plane take wing, how does -- they're off the call >> i love that >> get off my call there is nothing you can tell me that is going to help me yeah he's quite a piece of work you and i want to spend a lot of time talking about this deal so let's get a break in. >> now only 9:09. >> that's all right. you and i are going to spend a few minutes talking about what say very large deal in health care centene buying wellcare. the white house renews the push to scrap the affordable care act. jim and i will be all over that. also ahead, kevin hassett, rick santelli will be speaking with him. a look at futures.

more "squawk on the street" live from post nine when we return. (indistinguishable muttering) that was awful. why are you so good at this? had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum- just to help you improve your skills. boom! mad skills. education to take your trading to the next level. only with td ameritrade.

welcome back big deal to tell you about in

health insurance you can see of course the two players right there, moving in opposite directions, centene the acquirer, wellcare being bought by centene it is going to create a regional player in the medicare and medicaid insurance market. becoming more of a national player let's give you some of the details here 17.3 billion total, including debt that's a cash and stock deal 120 bucks a share in cash. 3.38 shares of centene you saw wellcare up sharply. now it is not accretive to eps until year two 500 million in synergies annually, not until year two slightly dilutive year one after close. pro forma 2019 revenues, $97 billion to give you a sense of the size here. $5 billion in ebitda will take a while to close there are overlaps in certain

states in terms of medicaid. >> would not be much of a problem to get the overlaps fixed. >> we got a lot to share they don't feel that will be an issue? >> they don't. he's trying to build national footprint, he has lowered the cost of health care in this country rather dramatically and raised the quality in all of the standards that i've seen he does more outcomes management, artificial intelligence, figuring out what to do, and, by the way, i don't know a soul who hasn't thought that the acquisitions have been perfect. >> good ones to your point, three overlapping statements when it comes to the medicaid market, of course, centene, this is getting them bigger in medicare. >> there is issues involving aca, it may not be as correlative, medicare, comes into states, and he lowers the

cost of each state again, i can't find anything objective that disputes his raising of quality thesis. >> those states are florida, georgia, illinois. some analysts saying it could create some time for them. just make it a longer -- longer deal stock getting done and you can see, centene, you expect it to be down this much what is that a result of there >> i did not cvs, by the way, i had larry murlow on. >> care mark, owned by cvs, centene has its own benefits manager. once the deal is completed, they'll move to that one, hence cvs loses the business, why it is down. >> i still believe in larry murlow's thesis. >> that stock has done nothing but what lately? >> go down it is the taylor brands of the health care business

s they a benchmark that's just unbelievable but, look, cvs is a show me story. cvs is a story about trying to get away from just the clutches of retail. it is a story about losing money. >> great that sounds look a stock i want to own. >> yeah. they do, like, etf of companies that go down and then you can say, okay, i want to own an etf that goes down. >> should be a short etf. >> cvs, come on, they will not stop selling because it had this nascent move from 53 where the insiders bought a lot, and, david, it has been a house of pain it is job-like >> back to this large deal, there was -- there is some -- i did not pick this up, and speaking of people close to the deal, but there is an idea it was a defensive for centene, would humana have had any

interest these companies, small word, know each other well, and talking to each other as you often hear us when we talk about the background of a deal talking to each other for a long time, finally had a view of the future that aligned, wellcare decided it was time. >> happy birthday to nancy pelosi, 79 pelosi says this, cruz says that, but what happens is usually nothing. a whole lot of nothing. >> but do you want to be in the government market right now? >> he's coming below what -- he made money it has been a hugely profitable enterprise until this, a giant outperform let's stay close to this >> right >> cvs cut in half it is not a two for one split. >> yeah. back to cvs, it has not gone well since the aetna deal. >> i prefer pbs to cvs.

>> not without its challenges is cbs. >> where is cbs viacom >> it is surprising to me that i have not been able to ascertain that the two companies have yet begun negotiations i fully expect that still will be the case. >> can you book -- >> he's not going to say anything about it. you've got to have the board of cbs ready to do it and ready to have -- ready to have the record that they looked at the -- they looked at the landscape, fully understood it, the opportunities and made the decision to pursue something with viacom because of that. >> show time. >> yes, show time. cbs. >> apple bundle, david, there isn't a moment where i'm not asald assailed on the apple bundle it is fabulous for consumers if you have kids that don't -- that work at jobs where they say in the mental health field, they don't like a lot of money, but they like some stuff and they're on the family plan -- >> how did you go from cvs and

cbs to the apple bundle? >> i'm completely a-linear. >> we have john ledger wants to talk about the merger with sprint, all the benefits it will bring consumers more to say, he says thought he would start the blog by posing a few important questions. how happy are you with your wireless service how about cable or satellite service? has it been getting better or cheaper? did you live in a rural community? all the things they emphasize in how to increase competition and fortify this nation's efforts when it comes to 5g. it is going to be a year since that deal was announced. >> ledger has been -- next year he'll wear a tie. >> i get questions about where it stands in terms of the doj. i don't know is what i say i don't know the staff can have one view, mr. delrahim might have another.

>> what happened to deals and you announce them and they close. the chinese blocked deals, the ftc blocks deals what deals get done? >> where is that. >> they'll make the chinese divest grinder. >> really? >> yes >> i got to tell you, the centene, i'm saying right now at the end of the day, it is going to be a buy. hammered too much. i think he tells a compelling story. >> we end it where we started. i like that. thank you. up next, jim's mad dash. we'll count you down to the opening bell ten minutes until we get started with trading one more look at futures before we do that heading for an up open more "squawk on the street" after this

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♪ ♪ it's all right it's saturday night ♪ all right, hump day here time for the mad dash. we take a look at housing, lennar is our lead. >> they talked about a pause in housing. and you can see the pause in housing. a lot of this was because we have this fed chairman steven moore, jay powell. and when jay said things are really doing fabulous in the economy, he was not looking at lennar chart largest home builder. lennar came out this morning and said orders are blockbuster. blockbuster. fantastic quarter. talking about backlog up, the revenue is terrific.

stewart miller, executive chairman, is still leading the lease and we used to have stewart on all the time. this was -- he said they got choppiness but this quarter getting better and better and better, that is in sync with kb homes, which last night told a glorious story about how california is coming back month to month to month. david because of lower rates, and house costs going down what is the starter home in san francisco? 1.2. these are both very upstocks congratulations to zelman who said buy the stocks here they're continue to go higher. rates are down the spring selling season is setting up fabulously. >> story today in the wall street journal about the ex-urbs -- >> i went to look to buy a lot

of land in riverside i should have done it. instead i watched my daughter's field hockey games you know, you never miss -- you can't miss buying real estate instead of watching your kids' games. priorities, david. >> i'll remember that. yes. >> you can watch your kids' game, but you can't rarely buy real estate so cheaply. >> billions, david, billions >> ringing the opening bell. billions, the cast of, the show eng llfitime opinbe, ve minutes away. choosing my car insurance was the easiest decision ever.

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whatever your financial goals are, a u.s. bank wealth management advisor can help make them a reality. talk to one today. u.s. bank - the power of possible. you're watching cnbc's "squawk on the street. we're live from the financial capital of the world the opening bell going to ring a little less than two minutes from now what's the key to the market today, jim what is one of the keys to how things are going to set up and trade? >> it is still going to be apple because of the confusion last night about qualcomm qualcomm won a minor decision by administrative law judge that goes to recommendation for commission apple won a major victory against qualcomm, but commission

ruling against qualcomm. there is a huge san diego court case -- >> it is happening this is the central one of the dispute between the two companies that has been ongoing and the legal fees, oh, my god, the hundreds of millions of legal fees >> such an annuity for firms qualcomm, people think it is rolling the dice >> don't forget we haven't heard from the ftc case yet. the judge's comments during the course of the case makes people believe she may well rule against qualcomm who knows? >> that is a great concern for them. >> people thought that she said it would be a six-week period. we're in week seven. i expect that thing to come down any day, perhaps friday. it is going to show vast confusion. if it goes for apple, apple will go to 195. i have no idea what -- >> apple reversed yesterday on news of the first win for

qualcomm later in the day, apple came back, after the close, after we got the second ruling or learned about it >> so mportant that is a case where if qualcomm loses -- >> yeah. we got to refocus on that and we will here is the opening bell some of the cast from "billions," one of my favorite shows doing the honors at the big board, celebrating a fourth season of that drama. andrew ross sorkin one of the executive producers. at the nasdaq, genfit, focused on the treatment of liver diseases, celebrating its initial public offering today. >> this is a really interesting market, david. there was a piece, citigroup, it is working. >> i saw that.

>> it is amazing people are are just willing to -- it is moss to flame. they want to own this boeing very, very bad ly talk about a -- >> marty musy, they reported the number was fine. but the company -- the stock sells off repeatedly when they report and, david, it comes right back the analysts don't like it for the most part. but a huge winner because employment is so strong. something that was said in kb homes when they said there is no recession. i have to tell you something everybody talks about -- the inverted yield curve, which bores the heck out of people, i'm going to -- i used to interview steven moore. >> you did you've been at cnbc as long as we have, it is inevitable you would have encounted mr. moore at some point. >> he's calling for a 50 basis point reduction. what would you do if he got his way? they would have nothing to say, just be blathered, mindless

blather, because moore would have reduced -- >> would make the minutes more interesting, i guess i don't know >> he's very good. poised >> didn't work out that well in kansas, that whole plan. >> no. you remember when we used to be worried about the chinese owning our treasurys? >> yes >> that was another canard no one cared. >> no. >> just didn't matter. >> it didn't seem to matter. they would talk about the chinese -- and then just crush us never realizing, of course in doing so they would crush themselves too if they sold everything at once they keep coming down anyway. >> they have a good basis. i continue to believe we speak way too much about what the, we speak way too much i do think that we spend way too much time talking about treasuries because they are not as complicit toward -- people think, well, aren't they going to cause a recession, self-fulfilling? no, they lower mortgage rates and spurs more housing activity,

which is 10% of the u.s. economy and people do better how do you think home depot and lowe's got up where they were? home depot was wallowing lowe's, where is marvin ellison? look at this thing look at what lowe's is doing ten points from the high, it is going there. i like lowe's. >> you do? >> it is better than it used to be >> why is that >> marvin is going -- >> what are they doing at your lowe's -- >> they're using -- they actually -- they have much more that is in stock, one thing they have done, they're using much more machine -- artificial intelligence to think what people want. they're winning back the contractors who pretty much en masse went to home depot because home depot was using a sales force continuum. the wholesales force suite i've been trying to get comments from sales force on this somewhat negative story involving -- i don't want to dignify this story, there are issues involving a website that sales force powered.

talking about prostitution, sex trade. and is the lawsuit fatuous i do not know. i'm trying to do my best to get comment. >> you'll bring that to us when you get comment on that. >> nvidia, unstoppable >> nvidia was the key to the market yesterday >> just keeps going higher. >> approaching 179 right now. >> is it an exciting market? >> i don't find it particularly exciting i am looking forward to the ip ipos lyft will do some drama. >> i think there san expectation it will be quite strong. we'll see where lyft prices. we won't know until tomorrow after the close, perhaps as late as tomorrow night. >> my guess is it is going to start with a 7 they got a lot of different constituencies, remember, you want the underwriters being pressured by those who are going to buy it to try and keep it as low as possible. >> exactly

>> but you got so many -- they raised so much private money, you've got so many shareholders already who want to see as high a number as possible but the company is in the middle where they got so much more behind it. it is only 30 million shares, right? so -- >> remember, 2016, 2016, 18% gross margins, last year they increase that to 42.3. management says they'll have a 70% gross margin, 20% ebitda margin, up from a negative 43 last year. this company is doing incredibly well i'm advising people to pay i think 75. >> friday morning and seeing indications of this thing, not a new york stock exchange. >> i think the stock goes to 75. if you get 65, lyft will be at $21.5 billion company and it is still cheaper than netflix and etsy or zora spotify. >> there is one little anecdote that is somewhat interesting

it is going to price at the very end of the quarter friday is the last day of the quarter, i guess and you're going to have firms that are going to have to file their 13-fs 45 days after the quarter. it is going to be pretty quick for the underwriters to know if you are a seller, they're going to know very quickly and if you would buy more in the after market, they are going to look at what you own because they got uber coming next. they got pinterest coming. you better not just held what you bought, but buy more in the after market to support it and they're going to know because the 13-fs will be out pretty quickly. >> i'm glad you mentioned that i was trying to describe to people, this comes to my thesis about why if 50% of the money is indexed, the brokers are going to hold you to owning stock. you want uber stock, which is going to be -- >> exactly allocation on uber

and whatever else is coming down the pipe we'll talk more about the lyft ipo, a key feature on friday but glad we had an opportunity here. >> i think there is excitement a lot of people say, jim, that means people are complacent. no there are ipos of companies that have no -- that have been waiting in the wings and people want to own them people are going to get hurt in the end? they always do this is going to be one of the most exciting months that we have ever worked really we had a lot of exciting months. >> this is really exciting this is -- i think lyft is a huge good deal i'm encouraging people to be in it. >> uber will be more interesting, probably not far behind not far behind. >> uber will have the facebook-like feel to it if they're not careful. >> that will be here at the nyse we're looking forward to -- we don't have a date yet. >> we don't have a date yet. >> i'll sure daria will sit there and talk to us. >> daria is so good. >> so good >> really good executive. >> righted the shipthere at that company let's go back to the big deal.

i want to look at where centene is trading you don't set these things up for the acquirer stock to go down you want it to go up jim pointed out, centene is coming back a bit. there is shareholders at wellcare, 29% roughly if i remember, of the combined company. it is both cash and stock. >> centene is a really good company and it has been a horse for a long time. they bought fidelus in new york state. that was a religious managed care, they have done remarkable with that. that just happened i think this market likes to forgive and my forgiveness stock of the day is dollar general >> okay. >> this stock is back to where it was when it so-called severely disappointed. what does that tell you? the market wants growth. dollar general is growth so i -- these are positive

signs, measured against oncoming supply >> market seems to be quite forgiving in many cases. >> look at boeing. >> look at boeing. you pointed out, still up 17% over the last three months >> that's incredible it really is incredible. if carnival comes back, that would be something that was a disappointment versus norwegian which i had the week before >> ronald donald was on yesterday. >> there are big companies that blow up. arnold donald has missed the last few quarters. an excellent interview it yields 4. i think that's interesting piece of business. interesting. the banks, have you checked in with jamie lately? >> i haven't talked to jamie in a little while have you >> maybe after the show. the banks are still -- >> the banks, by the way, i find goldman sachs fascinating. they came up a lot in our

conversation and your enthusiasm about the credit card, the -- >> i switched. i switched. >> and goldman's, the way that david solomon is changing that company is not insignificant >> thank you >> it is something that bears watching we haven't talked as often lately about 1 mdb it is not over >> what are you hearing? >> i don't even want to speculate. but it is just that it is still out there. >> you have the maxine waters hearings, i don't think she says, you know what, i'm switching my account to you. i don't think that will be the thrust of her questioning. is aoc in the questioning. she gets a lot of publicity given the fact she's just the old aon corp they changed the symbol. >> i think too much. >> let's not make a judgment >> i would love to have her on,

debate her on her opposition to amazon's second quarters. >> celgene coming back i'm throwing you every -- i'm throwing you everything. >> we have a very good rotation. that's looking forward to opening. that's usually the best day of the year, there is still hope. couple of days later, it is over as a mets fan. you phillies are really strong. >> very strong a very different team. i'm going to a lot of games. apple is coming back the way it should i still think -- i still think that apple has become a story about goldman. >> you were the one who focused on that. i asked people yesterday what about innovation, came back to the card >> prosaic is a win. i was talking to my phone yesterday, while playing chess on it, and saying, this is worthless. like the analysts. i do everything on my phone, but it is worthless.

this is -- this shows you how small tim cook's mind is that he did this i use my watch constantly. i to be the call from someo i took a call on my watch, indisposed and my watch was perfect. >> that's great. i don't have a watch this tells me the time and it is basically right here anyway. >> get with the program. >> yeah. sure i do. by the way, celgene, bristol-myers, should hear monday, could be sooner, could be more likely monday >> i'm keeping focused on that bristol-myers needs that, forgiveness, last night, i know it was closely followed by you, ollie's bargain story, the company, they reported, people thought the same store sales

were bad this stock is up we're going to ollie's it is like a virtual push cart they did well in part because they got all the toys "r" us toys >> ollie's -- >> how do you not follow >> i brought ulta to you when ulta was a glint in your eye and look at that best performing retail. >> ulta. great stock. >> and dollar tree, ever since our friend, your friends at starboard. >> never been in an ulta nor an ollie's nor a dollar tree nor a dollar general. >> ulta has a trace track which leads to the beauty parlor in the back no use to me midsingle digit sales. up front, since estee lauder came in, you have mass, you have prestige, and you have aspirational prestige, they are killing it some people wondering if they're taking business from sephora in jcpenney, a blackout moment. you should look at the rewards

over $1200, a birthday present >> rewards. >> they won 30 million people in their royalty program. that's so many more than starbucks, which has, like, 20 times the number of stores kevin johnson has to get on the case k.j. is missing the boat >> you went from ulta to starbucks. >> why not >> like that where i want to end before we get to bob, southwest airlines looks like it would be down. now it is up. >> it is not going to go down because gary kelly is so good. i know we have to move on. i keep mentioning gary kelly because gary kelly is the master >> there it is southwest. apparently, the utilities are lagging. and with that, to bob pisani with more on the floor of what's moving this morning. >> nice up day two things really matter right now. europe has been better, not just today, but really all week i think that's a nice help to our markets. and second, we got trade deficit

numbers that were much better than expected at 8:30 eastern time, china probably buying more soybeans from us that moved the futures up as well take a look at the sectors and the leadership is the same as it has been for a while now we're talking about semiconductors what are we up has to be up 20% or so opened on the up side early on down a little bit now. retail has done well energy stocks, oil over $60. that's been a leader banks have not been a leader they were up until the beginning of march and all the concerns about interest rates they're not. we have noted often in the last week about how horrible retail -- the regional banks are, just take a look, all down double digits in the month of march. most are still up on the year. we had a great january and february overall but these -- the declines, particularly the short-term rates, killed the regional banks overall. there are sectors of the

financials that are doing very, very well. fin tech, a name we throw around a lot, without having a lot of meaning, has been spectacular. you look at companies involved in any of the electronic and mobile payments, you know, lending tree, first data square, pay pal, fiserv, they're having spectacular years so far year is only three months old. it is about electronic and mobile payments and much, much less about classic large banks that are out there i know everybody is upset about the lower mortgage rates has anybody looked at their bond portfolios yes there is etfs to all of that these days it is pretty darn good there is the global x. there is an etf for that too want to own fin tech, the one to own. it is not that large you can see it is up 23% or so on the year. meantime, let's talk about your bond portfolios. i know everybody is upset about the lower interest rates everybody is making money.

there is the high yield, up 6% so far this year the biggest corporate bond etf, up 5%. the tips treasury inflation, that's up 3% even the lowly treasury etf, 7 to 10 years, up 2.2% the yields you're getting. these are price moves, not yields so throw that in with 12% increases in the s&p 500, you get a 60/40 stock bond portfolio. you're doing pretty darn good if you got an average portfolio 60% stocks, 40% bonds, should be very happy in the first quarter. just the home builders are up, jim mentioned this, but stewart miller talked about improving and stabilizing housing market the orders were down, but better than expected. and that's the key they want a normal spring housing season ahead of kb home, talked about improving market conditions, these are the magic words that everybody wanted. wasn't like the numbers weren't necessarily so good, the overall

outlook, there is an etf for that as well the itb, that's up 17%, 18% so far this year, up 2% today we're sitting just off the highs for the day. back to you. >> bob pisani on the floor now time to get to the bond pits join rick santelli at the cme group in chicago >> good morning, david a big day in the market, especially if you're looking at interest rates one of the big issues was germany auctioned off some bunds. they were highly oversubscribed to the kind of bid to cover numbers we see in the u.s. but the deal was they were auctioned off with negative yields, first time since 2016. how do you think that affected all the sovereigns around the world? i'll tell you, put in buyers pushing yields down. so anybody who wants to talk about the yield curve and i do believe you need to pay attention to it, but you also need to pay attention to all of the variables that are affecting it, like that bund auction

right now, you have the short end down 7, 8 basis points look at two-day of 10s, two-day of bunds, let's shoot bunds to the last time they were down at these levels, september of 2016. but it doesn't end there globally turkey has elections coming up a lot of issues going on they want to keep their currency from getting out of control and to do that, boy, they had to really move some forward markets, yes, they the insta bull 100, you see what it did. some of the forward rates surged over a thousand percent. not that all this is going to have a huge effect, but something to pay attention to. dollar index, meanwhile, off in its own world, maybe the instanbul gives you insight. there is demand for dollars. finally, at 10:30, we'll talk to the man, the chairman, kevin

hassett, so much to talk about make skwlour don't miss it jim and david, back to you >> okay. and we are looking forward to that thank you, rick santelli something else we're looking forward to, two days away from that big morning for the ipo market, of course. be sure morning from the ipo market. a look at lyft's public debut right here on "squawk on the street." his family. his steinway, which met a burst pipe. so grant met his insurance: you are caller number 12. which didn't quite cover the steinway. but what if he'd met pure insurance? owned by members. he'd have met: lisa, your member advocate. who'd introduce him to gustav: leave it to me.

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welcome back you've got a big show tonight at the old "mad money." >> paychex and i've got marty mucci who by the way will give an outlook on the economy and michael neidhoff will explain why he will buy, not sell. what a show.

>> i think he should come on here they help shape the day's trade when they announce a deal. >> people tape us and watch us all day and all night. typically i see people, listen, my grand uncle loves you, can i do a selfie? >> grand uncles, a great demographic. >> coming up, kevin hassett, chairman othf e president's council on economic advisers keep it right here ♪ you should be mad they gave this guy a promotion.

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♪ good morning and welcome back to "squawk on the street. i'm sara eisen along with david faber, live as always from post nine at the new york stock exchange carl quintanilla has the morning off. a look at where we stand with the markets. had a little early rally reversed in the last few moments or so. the dow is negative down 15 and the s&p down a little more than .1% and nasdaq down.02% we've been watching boeing all over the place is it down is that what took it down? >> flat now. not doing much of anything was up earlier in the first half

hour of the session. >> that's ahead of the hearings on capitol hill. our road map of the hour starts with boeing and southwest cutting its revenue outlook, becoming the first airline to cite losses from grounding its boeing 737 max fleet we've got the full details. >> plus, a double dose of ipo news as the floodgates begin to open we're talking rests and rides. and barney's is going high end. the retailer banking on cannabis, opening a luxury marijuana lifestyle shop we'll talk to the ceo. >> first though stocks are down a bit this morning, this after what was a higher open the s&p is looking for what would be its best quarter since 2009, all this after the president reportedly unleashed his criticism on fed chair jerome powell yesterday in a meeting with house republicans saying he has, quote, no feel for the economy. joining us now to discuss, wells fargo portfolio manager brian van cronkite right here on set nice to have you. >> good morning.

>> you've been taking advantage of the volatility in the market. >> right. >> how have you done that, and do you expect to continue to be able to do that? >> we expect to be able to do that for a long time the macro volatility provide by the fed, by politics, by trade issues oftentimeses is a short-term issue for a lot of these companies that we're focused on, looking out two, three years, focusing on the true capital of companies, the stock prices are far more volatile than the cash flows so last year input cost inflation and trade issues was steals led to industrials being pressured and margins getting squeezed we used them as the bible stocks using things similar to that. >> what are some of those things and where are they leading to if not some of the names we've mentioned? >> focusing on industrials and finding value in some of the insurance names. the financial sector can move around quickly as yield curves invert and rates move around and tied to that we're finding unique ways to play the housing

theme. fnf is currently going through a merger with stewart and that deal i think will close. when it does it's very creative for the stock and the stock is moving around with some volatility in the financial sector. >> want to bring in hodges small cap fund manager eric marshall as well. eric, give me your take right now on sort of where things stand given overall strong markets so far as we kind of get ready to close out the first quarter with the s&p up over 12%. >> well, we certainly had a good quarter coming off the of the december lows. i think the market in the december time frame real priced in an economic slow down that we haven't really start to see materialize, and we think right now, although investors are very concerned about the yield curve and trade and a lot of macro things, we're really laser focused on what's going on with the domestic small-cap earnings in the companies that we own in our portfolios, and we see them

actuallyholding up relatively well we think this is the time to really be focusing on earnings, and we still think investors can find good risk/reward in this market >> you know, on the yield curve, brian, that everybody is talking about, the consensus from a lot of the interviews we've had on cnbc from investors and strategists and economists is pay attention but you don't have to worry about it just yet is that the right advice >> i tend to agree with that right now. i think the fed is waiting to see the whites of the eyes of the enemy before it does any moves from here. would i look for a prolonged weekly, monthly even inversion before i start to worry about the economy, but i do think it has impact on stocks for example, banks will be drastically impacted by the movement of the level of rates and the curve itself again, that tips money from banks into insurance, and i think we need to worry about it and focus on it and we probably have some time until it's a true single for us. >> you and brian seem to be focused on value, value stocks as opposed to growth, and, of

course, there are many value investors who keep waiting and waiting and waiting for when it's going to outperform growth. why? why even bother? >> well, i think all the trend in passive investing has really rewarded momentum investing over the last five years, and i think that the incremental value fundamental buyer out there, there's fewer of us out there, so when the market does have these pullbacks to brian's point, the volatility becomes more extreme and in this environment you can take advantage of that. we're looking for periods of volatility to step in to pick up things at good prices at a time when there's not very many people doing that. >> it's interesting, of course the changing nature and complexion of the market structure itself, eric, as you say, has -- well, it's changed dramatically even over the last five years we're seeing more of that. passive investing seems to see

so much the way the dollars are flowing. does it change the approach at all given that. >> i think at some point you run into a tipping point now over half of the new money that's coming into the market is being invested through passive investing through etfs and index funds so i think once you get to the tipping point where the majority of the money has already been investing that way. that momentum slows down, and i think when that happens, that's when value really gets rewarded. but at the end of the day good capital allocation really matters across these companies. >> i fully agree with eric on that i think passive investing has pushed the market into momentum-based trades, and the most trapped index is the s&p 500. the sector index are in technology and discretionary health care, the growthier side of our universe, and as money flows into that it drives growth

stocks the same will be true on the other side when that flows out, saw that in q4, depleting from tech and discretionary and healthcare, growth will be lower. >> has it been frustrating obviously you guys are running portfolios you're also trying to attract assets it's not the easiest time to do that. >> i would agree it's not easiest time we're still doing that still we need to recognize what is our time horizon versus what is the market's time horizon? one of the best things we have is time arbitrage. the market can do things for short-term reasons and if you have a two or three-year view of things we can take advantage and we've done that. time arbitrage is a factor. >> eric, any specific cat lifts coming up, either macro or micro that will pause the shift in this rotation that you guys are hoping for >> well, we think like right now with interest rates coming back down there's some interesting

opportunities out there. obviously, you know, we think with the bonds doing what they have done here in the first quarter, they are no longer attractives, and we should start to see companies that are able to generate reasonable earnings growth at decent valuations that start to outperform so we like things like home builders right now, materials we also like certain areas of technology such as the semiconductors and some of the consumer discretionary names which you really have to look at on a case-by-case and really put a lot of emphasis on stock selection. >> guys, interesting conversation certainly going to watch that value versus growth debate appreciate both your time. thank you. >> thank you to bryant and eric. >> thank you. >> taking a look at southwest this morning the company did cut its first quarter guidance due to the grounding of its 737 max jet fleet. the airline is the first carrier to report the impact on its

earnings from the removal of those boeing jets from service, and speaking of boeing, we're learning more about the software fix for those 737 max planes turns out it will take boeing engineers about an hour to upgrade in the anti-stall system but it must first be approved by the faa and regulators around the globe. all of this is up for discussion today on capitol hill. top aviation safety regulators will be there to testify in the first of what is expected to be many hearings on airline safety. here's the chairman of the subcommittee senator ted cruz speaking earlier on "squawk box" about what they want to learn. >> we want to know how boeing, how private companies are involved in the faa's certification process. is that process, why didn't that process catch this problem if this was the cause of the accident, and what needs to be done number one to make sure that these planes are safe to fly, and, number two, to make sure that the oversight and regulatory system is preventing and catching these malfunctions

before they occur? >> the focus of today's testimony really is, david, on the regulatory side of things, acting faa administrator is there, u.s. department of transportation inspector general, chairman of the ntsb, and then the subcommittee plans to hold another hearing focusing more on the private sector impact, including boeing and other airlines, so today's question is really going to be about the approval and the faa's relationship with companies like boeing should be interesting. >> yeah. >> while in particular that -- that allowance for boeing's own employees, even though they are fully trained to do so. >> to do some of the safety inspections, yeah. >> and how they are planning to revamp the program they are totally looking at revamping the oversight of this construction and safety approach anyway, that's at 3:00 p.m. eastern. we'll be all over it when we come back on this show, a double dose of ipo news to get to dealing with rest and rides later, kevin hassett, the

chairman of the president's council on economic advisers will join us and at the break we'll take a look at some of the top performing stocks. awonhetrt"ilbel right back parsworld turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fueecosts. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances.

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floodgates are opening for ipos amid reports this morning of a new company that may be heading to the public markets.

casper, the mattress company, reportedly looking to hire underwriters for an ipo. the company was valued at $920 million, at least as of its latest round of funding. >> i was going to say how popular they are in my life among millenials including my sister come in small boxes. >> small boxes >> and spring into life. >> and turn into big mattresses. leonardo dicaprio and fifty cent original investors >> you were thinking about the box, i know, the mattress springs out. >> for some of these celebrity investors, and can you actually pay casper in their stores to take a nap in new york city. do you know about these? the nap stores >> i didn't. i learn something new here every day. >> then you don't have to nap on set. you can nap on a mattress. >> i like napping on set, but i never do it while dom chu is spiking and that is who is going to take a look at us at the ipo winners and losers and what

investors are still waiting to see happen, of course, in the months ahead we've got some big names coming, dom. >> we do, and have an idea right now, folks, that the ipo market is doing pretty well if you take a look at one of the etfs managed by renaissance capital, the ticker is up around 40% plus since the lows that we saw on christmas eve that's double what the s&p 500 has done during that similar time frame if you take a look at the ipo market right now though, so far year to date it hasn't been anything to write home about, and there are a number of reasons why market volatility from the end of lastyear, also the government shutdown, putting the brakes on some of that ipo filing and paperwork and registration, all that have has led to a slowdown so far over the same time last year. according to renaissance capital, if you take a look at the number of ipos priced this year, we're actually down about 60% from the same time last year is a pricings so far 35 ipos have actually filed. that's down about 13%, and in terms of overall funds raised, we're down about 83% from the

same time last year, about $2.1 billion raised so far year to date per renaissance capital one of the bigger ones to keep an eye on is the biggest so far this year and that's been levi strauss. the biggest overall market cap and in terms of funds raised, that's a pretty healthy sign of some of the consumer ipos coming, and you mentioned this idea that we could see a large slate of these companies coming out here in the coming months and take a look at some of these big names before, because we have lyft, like we said, expected on friday pinterest, uber, peloton, post maids, airbnb, slack, palantir among others and, of course, the casper headline coming up from reuters, all of this shaping up for the ipo picture. a lot of companies trying to come public. we'll see if they can do so in this current market environment. back over to you guys. >> dom, thank you. sticking with the public markets, turns out americans' views on the stock market are rebounding from a plunge in december let's get to steve liesman with the brand-new results from

cnbc's all america survey. good morning, steve. >> reporter: 800 americans polled across the country, all groups, all races, all geographies, what we find is that we did get a bounceback from the plunge in december but haven't come all the way back. 42% now is a good time to invest in stocks, up from december but not where we were in the heights of the market in the prior survey that's two surveys back last fall then we talk about the financial elites, people with a lot of money in the market and a lot of income they have come back as well, but not as optimistic as they were, looking all the way to the left though, you can see that we've gotten -- we still remain quite a bit where we were before the election back in november 2016 taking a look at the issue of -- look at this, the optimism just really tracts market it the did not track it earlier in 2016 but since then you can

see that maybe the market has fallen a bit more than optimism would suggest, so it either has further to fall or it's good that americans have retained the optimism a look at two other key indicators in our survey expectations for wages held up pretty well. 40% of americans expect increases in the next few months but not so true for the lowest income group, those making less than 30,000. they have given up on those making more than 100,000, they remain very optimistic about their wages, and then we also have pretty good expectations on home prices, but they have come down again from the high levels of 2017, 2018. 42% expect an increase that's just about average. let's put it the all together. overall what is the american optimism you can see it's down from the heights but ticked up just a little bit 37% are pessimistic now and for the future 41% optimistic now and for the future sara >> so, steve, i know some of your earlier reports and other

findings involved some more political sort of questioning. >> reporter: yeah. >> but bottom line what you just shared, is this good news for president trump in seeking re-election? think so, sara his economic approval has again come down from the tons, and it very easily tracks gdp quite well, but it's down to sort of a more stable area i think the president's big problem is the difference that we find between overall approval on this economic stewardship versus overall job approach. he is negative on overall job approval by nine points, positive by four points on economic approval. >> interesting steve, thanks. >> reporter: pleasure. when we come back, retailer barney's is adding a new department to its stores cannabis, and the ceo joins us to discuss its high-end boutique and the state of the consumer. plus, a big interview you don't want to the miss tomorrow right here on "squawk on the street. eu's competitionomssne fresh off the google fine.

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mike santoli taking a look at home builders this, mo mike >> one of the most reliable and traditional dynamics in the market is treasury yield plunge. we saw lennar and kb homes report okay numbers in the last 24 hours or so and these etfs, look at itb that's the dow jones home construction etf has been a leader today and then you have the hxb housing index. what's interesting is the contrast between these two they are both well off their highs from last year and fighting their way back into perhaps a new trading range. the itb is a much purer play on home building and home construction, whereas the xhb has a lot of retailers in there like home depot and lowe's and william sonoma noisier and held up better but has more leverage to a recovery in the housing starts. by the way, i know you know the

inside guts. one of the top holdsings is "i, robot" so key to the housing market is ihbs >> you buy a new house, you buy a vacuum. >> trying to cast a wide net not that many pure home builders and not that much market cap so they had to pad it out. >> got to look to pad it somehow. mike, thank you. mike santoli. >> papa john's got an upgrade this morning from hold to sell the quote optimistic sentiment comes from a highly engaged board of directors coupled with a brand new spokesperson shaquille o'neal can reverse the declining traffic and ebitda traend we spoke with shaq last week after this big announcement and more on the trend. >> it's a big opportunity. we want to create a culture there now where people are

loved, welcomed and accepted we don't want to have any problems listen, peace is fun everybody knows that shaquille o'neal, they know that i'm in the fun business, and we want to get this thing back on track >> shaquille o'neal, the newest board member, investors and spokesperson for papa john's you missed quite an interview, i've got to say there. >> sorry not to the have been here. >> he was very impressive and articulate about what needs to change, directed the racism question right off the bat about some of the reputational hit that papa john's faced in the wake of its founder and the comments made on a conference call and how they really just got to repair their image and repair the relationship with the franchises >> very important for this company. took quite a while but seem to have made the right move with shaq investors agree. >> getting the benefit of the dow right now. up next, don't miss the

president of the president's council of economic advisers kevin hassett up next.

good morning, everybody. i'm sue herera here is your cnbc news update at this hour. british prime minister theresa may evaded a question from opposition leader jeremy corbyn on whether she would accept a series of results on parliamentary votes as a new negotiating path on britain's exit from the european union. >> what we have negotiated, the government's deal negotiated with the european union, delivers the benefits of a customs union an enabling us to have a free trade policy and negotiate free trade policies in our interests and not having to rely on brussels. >> seven people died in an air strike in syria which was said to have landed within 50 yards

of the facility's main building. pope francis today allowing nuns and priests to kiss his papal ring this is two days after he showed them pulling his hand away from followers and that drew criticism from conservative catholics who said he was abandoning church doctrine and tradition. that's the news update this hour guys, back down to you >> and i will take it. thank you, sue >> let's check in now at the cme group in chicago we've got the santelli exchange and rick has a very special guest. rick >> reporter: indeed. thank you, david i would like to well kevin hassett. chairman of president trump's council of economic advisers chairman hassett, thanks for joining me. >> great to be here, rick. >> all right let's keep this really simple. there's not only imports and exports in trade, there's imports and experts in policy, markets, conditions, economic

fundamentals this morning chairman, the german auctioned off bunds, negative yielding for the first time since 2016. is it no wonder that our rates continue to get pressured lower for many reasons, including but also but outside the notion of our economy slowing. what do you think about negative rates and some what have is getting exported from germany and japan and china regarding policy and economic weakness >> right, rick, as you know because you live right there on the floor, our bond is a substitute for their bonds and right now our ten-year is clearly responding to the negative news in europe and the news in europe, the economic us? real negative if you look at industrial production, if you look at ge mgdp numbers, some of the last five quarters are in recession. italy has a lot of stress, and the whole brexit thing is lurking over all of that what's different this year from last year, you know, last year at this time we were looking at a weak first quarter and

expecting a strong quarter, but the rest of the world was kind of doing a lot better. this year we're looking as a weak first quarter and expect a strong year and the momentum from europe and asia is much different than it was last year and that's what the bond market is responding to >> you know, no matter how powerful an airplane you have traveling throughout the air the winds coming at it will slow it down and the more they pick up the more it's going to exert head winds the u.s. economy has slowed a bit on its own but the big question, chairman, is how much is being exported to us as a headwind and even if it's more overseas what can we really do about it i like the underpinnings of the economy, but there's little doubt that we're getting affected by coming off our best economic levels and much of europe and japan really going down the basement with regard to theirs. >> right well, first of all, as you know since we have a big trade

deficit, the feedback into the u.s. economy of negative news around the world is much smaller than it would be for say, you know, a different economy like say germany where they really, really care about their exports to us if they were to go down. if we were in trouble it would really impact their economy. basically for the u.s. the question is as we look forward, that we'll more likely have upside or downside surprises, and i think the downside surprises really came over the last six months and involve the economies around the world and there's not a lot more negative news than could be worse than what we've seen in those places, a eck had of a lot of upside risk and that's one of the reasons why equity markets have really been able to digest everything and the upside risk last year at this time there was pessimism with us moving forward with trade deals we have usmca that can pass congress this year secretary mnuchin and ambassador lighthizer flying to china with the ongoing negotiations there's a lot of upside stuff

that can happen. meanwhile, deregulation is continuing to gather momentum. we're expecting a lot more regulation and in the u.s. the risks are balanced to being on the upside relative to last year and the negative news around the world is something to factor in but since you can think about things that break the other way for us, you should continue to be optimistic. >> and the thing you mention are the tailwinds. >> right. >> and i'm definitely on your side, the regs, taxes, all that business-friendly administration to me is the biggest deal and we saw that rally in stocks reflecting that even before donald trump was sworn in. but we have to leverage more lifting with regard to our domestic economy based on what's coming in. my next question is a simple one. that makes trade that much more important, and i think trade is outsized i think trade is the catalyst in so many areas that we're unaware of that should solutions be

found it will really give us a turn ore thrust so my suggestions are simple some of the agreements that are already done, will there be a problem pushing them through congress, and more importantly do you think that the china deal will include the trillions, not only the billions, buying more grain is fine, but we really need to keep our eye on the big praise prize and that's with a "t" and that's with i.t. >> going to china first, our negotiators are on the ground and i don't want to get too far out in front of them but they still wouldn't be working if they weren't making a heck of a lot progress and it's not about just one crop. it's about mixing a relationship that's not really been successful i think as far as usmca goes, really what's going to happen is congress is going to look at the details of the bill, the labor protections in mexico, even things like really important, things like ocean litter, agreements about limiting that, and they are going to think, you know, this is a really good deal that we've negotiated, the first 21st century trade deal that

america has signed on to real like the internet agreements, the data protections and so on. >> so you mean the same group in congress that won't take mueller at face value is just going to -- well, we'll get into that in another time. last week the treasury department released february monthly deficit. 234 billion, the biggest monthly deficit in history i understand that you have to have deficits to seed programs that deliver in the future, but i want you to weigh in on deficits. >> right i think you're right that the president's first round was to focus on the biggest problem, the highest corporate tax place on earth and regulations were advancing at a ridiculously high rate and our defense had been allowed to wither on the vine a little bit and increased defense spending he left a deregulation effort and the president caught paperwork costs and he passed

the tax cuts and now as you look forward, the deficit is a serious problem and that's why the president has proposed across-the-board spending cuts of 5% and as we look forward to debate over the budget we'll really stick to our guns and pursue a big reduction in government spending this year. >> i guess another issue i would like to bring up is when this administration wants lower rates and i understand, i get it, we now that see overseas keeping rates low and negative really hasn't made a huge difference. is it really problematic for this administration for its central bank to try to have some insurance for the next slowdown, a real slowdown, because we know somewhere out there there is one. >> well, i know the president has had some opinions about what's going on at the fed and that's not my role, and one thing we've said is we've appointed great folks over there to the fed and, you know, i think we're continuing to and

anyone who wonders whether we respect the independence of the fed and look at the caliber of people we've appointed. >> you've been on the record saying we have a shot of 3% for the next several plus years. >> that's right. >> i think you said five and i'm not necessarily disagreeing with you but you're certainly in the minority can you give me something in realtime that gives you confidence that the prediction will be correct. >> if you look at business sentiment, the national association of manufacturers, you just put out a survey where everybody is looking to expand and optimist bick this year. a first-quarter number, so the fact is that we've gone from a business under friendly environment with regulations expanding, 8% to 10% a year and the highest corporate tax rates on earth to a really attractive corporate tax environment with rapid deregulation that's not a one-year change that's not you'll have a sugar high for a year and request back to where you were. that's a fundamental change in the economy and we should go back to where we used to be

growing at around 3% and something we saw last year and something we'll see this year and even while you've watched some of the numbers like in autos and construction look really weak you've seen strong growth in the income growth. wage and income growth usually has a lot of momentum because wages don't change that frequently and to have high wage and income growth right now it's kind of like an insurance policy for strong growth this year. >> chairman, i'm going to ask you one final question whether or not you want to answer it or not. stephen moore is being put forth for the fed. many like stephen moore, nice conservative economist, but talking about a 50 basis point cut, personally, once again, i know you're not going to talk about the fed, but is it really wise to be saying these things if you want to be on the fed, conservatism on the balance sheet is a good thing, on policy is a good thing, but who knows what lies ahead. your final thoughts. >> right i think as the process moves

forward if steve ends up being the nominee he'll have good explanations for his positions and you're right he's gone through his career being a pundit and having really interesting things to say about a whole range of topics, but as a nominee you have to be more careful about every little word that you utter and he'll start pulling back his op-eds and preparing for confirmation should that arise. >> excellent chairman, really enjoyed our conversation. >> great to be here. >> i would like to have you back as we get more fundamental economic data moving forward sara, back to you. >> thank you, rick, very much. that was an if he gets the nomination and should the confirmations arise on stephen moore. >> that's what he said. >> the continued message of optimism and a positive outlook on the economy from the white house. he said there's a heck of a lot of upside for the rest of the year citing specifically congress passing the usmca if that happens and a potential trade deal with china. >> sounded optimistic on china which is not new but certainly

adds to it as mnuchin and lighthizer are on a plane right now to beijing certainly a positive view of it from hassett and on the super low ten-year yields it's europe's fault which is there is a dynamic there. global yields are falling. up next, barney's is adding a new department to its stores, cannabis the ceo joins us toss discuss its bet on the high end. stocks at this hour have bounced back into positive territory, at least looking at the dow, just three points or so barely. we're pretty flat with the s&p 500 down, too. some strength in the industrials today but not so much in energy anutits. d iliewe'll be right back.

the s&p on track for its best quarter in a decade and if history is any indication there could be even more gains ahead find out more on tradingnation.cnbc.com more "squawk on the street" coming up.

it's where the high lifestyle meets high-end living. barney's new york cutting the ribbon on its first high-end cannabis luxury and wellness comfort shop at its beverly hills location called the high end. the shop doesn't directly sell cannabis but sells luxury accessories like sterling silver grinders, vintage pipes and designer ashtrays. joining us here is now barney's president and ceo. welcome. >> good morning. thank you for having me. you're certainly gotten a lot of press and attention around this decision how did it come together >> actually my creative director came to me and said that he wanted to do actually a head shop, and after i took my head off the table and i thought about the idea it was something that, you know, really made sense for us as an organization.

i mean, there's a huge cultural shift and acceptance in terms of using cannabis, you know, for wellness and other, you know, sort of live style choices and we want to be part of that narrative, and in the end it's also about us creating experiences within our stores. it's, you know, this is not retail anymore this is about creating, you know, and reflecting lifestyle choices of our cut america and in the end los angeles after, you know, obviously legalization, you know, our customers were asking for these types of products, and so it made sense for us to do it in a very barbieney's way and not a traditional head shop way and offer products that really reflect the sensibility of the store and, you know, that's how it all began >> what do you know about the demographic of the typical cannabis user or however it may be are they usually of a -- of a

space in terms of the -- the monetary spectrum where they can afford to buy these kinds of things >> i mean, it is our customer. it is someone -- the customer who is already engaged with us in terms of the product and sort of our -- our analysis before we went into the business it is very much the demographics. >> are those bongs i'm looking at there. >> no, no. >> i with do sell bongs. >> we are selling bongs. i mean, they are beautiful, decorative objects. >> all of these things are beautiful, pipes. >> 1,000 glass-blown pipes. >> by one of our artisans that's been in the store for more than ten years. we've had so many of our brands and designers and artisans want to engage and do products with us, so we actually had to really -- we wanted to be very curated and very edited so we had to level set it a little bit, but the enthusiasm for the project has been overwhelming,

and it's nice to be able to, you know, have designers and brands that are in the store that are maybe doing one type of product to evolve into something like this. >> i can think of a lot of people i can get gifts for now. >> oh, real. >> you'll have to go to beverly hills. that's one uses recreational use is permitted in california with you the federal government, it's still illegal in this country. did that give you any sort of pause about that >> certainly gave us pause and we made sure that we, you know, today within the guidelines and obviously we're not selling it anywhere outside of california, burks remember, we're not selling cannabis also so any cannabis product that is being sold is being sold through bibo and most of what we're selling are accessories that complement bibo. we can actually sell these locations in other locations and do intend to obviously we'll follow legislation and when it does become legal in certain other

states it will be very much a part of the retail experience. >> these are very -- sorry to interrupt. these are very high price points as we watch them go by here. >> ever gone barney's, david >> i have. >> there's a range of price points i would say. >> yeah. >> of course, we're showing you the things that are most special but there's a range of price points and that also reflects the demographics of our customer as well. >> right. >> you know, we don't label these -- everyone labels everything sort of luxury, but at the end of the day it is about a range of -- a range of products, and what the individual perceives as luxury. >> how is it going so far? >> it's been fantastic i mean, everyone gets up here and says their projects are fantastic. >> usually. >> this actually happens to be the case it has been not only the engagement in terms of the brand and in terms of, you know, interaction with our consumer, but the sales have been spectacular out of beverly hills, and it will also launch online in the next couple of

weeks behind a gated, of course, experience. >> we've been covering the decline of american department stores for a long time now and doing poorly in this kind of better consumer environment. dealing with traffic issues and competition with online and brands barney's is private, so we don't really have a sense of how you guys have navigated some of these troubles how has it been doing? >> i think we've done better than most because of projects like this. we are not -- if you're going to think about retail in a traditional format, it's not going to work. if you're thinking about retail as entertainment, as media, as wellness, even food, we're in all of those businesses now, and we consider ourselves in a very different type of, you know, it's not just about product anymore. it has to be more than, that and, you know, if you're not looking tat that way, then i don't see how it can sustain itself and these type of experiences that we're creating

in environments, we want to be the venue for all of these things so you'll see a lot more of these sort of, you know, installations and projects that are very different than what we've done in the past. >> the what would be another example? >> so another example, is you know, dish mean, our food and beverage business is absolutely fantastic our restaurant business is amazing. so we're doing a lot of projects with designers and brands around food and wellness, that will take place in our restaurant and again, that drives traffic to the physical stores and for us, you know, the physical environment is also a place where, you know, we know that all of the social media that happens around the brand happens inside of our stores, right? so the more we create sort of entertainment and value there, the more we're going to attract a consumer to cross that threshold. >> any particularly strong selling items from the ones that we've seen here at the -- we're not showing them right now, but -- >> i don't know if you showed devon bay, but the devon bay

products have been fantastic, which is out of france and just these exquisite paper products those have been a huge success affable, the vebo piece of it has also been successful i mean, obviously, not run through us, but some of the hand-blown bongs have also sold. and again, these are incredible objects. it's also about, you know, sometimes people just responding to the beauty of the piece >> yeah. >> i mean, i guess my only question is, there's so little research long-term on legalizing marijuana and what it's going to do to us as a society and health concerns and i wonder just if you deal with that conflict at all? you're not selling cannabis, but it's an implicit promotion of the use of a drug. >> we certainly think about it, but i think the way the research is moving and the way, you know, the medical community is looking at it, that there are more positives than once thought.

we're going to be very careful about who we sell it to and make sure that it's obviously someone who's over 21 and can make those decisions for themselves but, you know, we also sell alcohol in our stores. and you know, we're, again, not selling cannabis, but it is you know, something that obviously we're mindful of >> thank you so much for coming on to talk about it. >> thank you appreciate you having me daniella viale, ceo of barneys >> you like that bong? >> everybody needs a beautiful hand-blown bong. they do. ye yeah >> absolutely. >> and some rolling papers and other things >> thank you let's get to jon fortt and get a look at what's coming up on "squawk alley. >> david, glad you could weed through all of those issues and hash them out. coming up, we're going to talk some ipos. we have two of the top vcs in new york we're going to talk ipos the

overall tech environment, the new digital landscape, all of that's coming up on "squawk alley.

welcome back to "squawk on the street." i'm dominic chu. markets right now trying to find a way to add to yesterday's gains, but we are at the lows of the session. right now, one of the best

sector performers on a relative basis, the industrials, airline stocks helping to provide some of that leadership you've got shares of southwest, american, united, continental, and delta, some of the best performers in that sector. southwest was down earlier in the morning after cutting its forecast for a key revenue metric, but those losses have reversed, at least for now that's helping to boost the i-shares transportation etf to a gain of just, well, at this point here, not that much. but anyway, the fund is up around 15% since the lows on christmas eve. watch those transports now i will send it back downtown to you guys, david, at the stock exchange >> yeah, okay, as we watched after a first initial rally there, the s&p, of course, down about a third of a percent thank you, dom i always tend to think then about what the s&p will look like at the close. and then i think of you and wilfried, not to forget your co-anchor. what have you got coming up? >> we're going to be all over it later today, we also have the former apple ceo john sculley here on apple's big shift towards services

and whether it's a cultural shift for the company. what steve jobs would have thought about the announcement someone who -- >> he's good on health care, is where he really can be helpful, given that's where his focus has been for some time >> correct and whether apple is making significant inroads there with the watch and other services also, we have some big earnings to digest after the bell liululemon has been a big winner pph, so on the retail apparel front, see what we can glean about the u.s. consumer. this move in yields, we're seeing yields near the end of the session, what could be stocks are teeing off of as they get nervous about what those lower levels are telling us. >> we'll have a lot more on that and "squawk alley," of course, coming up next don't go away.

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can be a little more... like plants. ♪ good morning it's 8:00 a.m. at lyft headquarters in san francisco, 11:00 a.m. here on wall street and "squawk alley" is live ♪ here we come, walking down th street ♪ ♪ get the funniest looks from everyone we meet ♪ ♪ hey, hey, we're the monkeys ♪ and people say we're monkeyin around ♪ ♪ but we're too busy singing ♪ to put anybody down ♪ we go where we want t