check it out the stock is under pressure this morning for walgreen's after an earnings missed and slashing their forecast for four years. that stock is off by 9.54% make sure you join us tomorrow, right now it is time for "squawk on the street. we'll see you. ♪ good tuesday morning, welcome to "squawk on the street," i am carl quintanilla with jim cramer, david faber is off again this morning coming off the dow best days in six weeks. lyft is down another 4%. we'll watch that europe is steady durables were soft here. our road map is going to begin with lyft down again

why jim thinks this is a bad oman for the rest of the market. shaking up the major indices as well we'll talk to the ceo, amazon slashing prices of whole foods to the tune of 20% on average, what's behind that move? first up, lyft extending its loss in the premarket as it enters the third day of trading. ipo price down more questions of what ability sellers have to sellers short and why is it over subscribed 20 times. >> what i thought was if you price it 72, good sign you are releasing some of the buyers so you find supply. this was considered to be a total revenue gross story of

100% most companies that are losing money and growing out fast now we have a question, where do they put it? did they have anybody who said listen, do you think there is going r going to be a buyer? they placed it badly and not priced it badly. >> how much do you think it will take off uber's potential price? >> what i did not could want on -- count on was the first few. it was handled think about it, a group of retailers came in by the end and there were institutions trying to build a big position in '72. so they got some in '72 and bought more on opening day people are saying oh you know, when you admit when you are wrong. i am right and shut up

no, i thought it would hold at 72. that's so wrong. if you told people in this business who have worked for a long time that thing would blow past 72. they would say no way. it would never be that bad >> i completely agree. everyone agree it is change. >> it is so unusual. do you know how many companies that we have that at that level of growth that people say listen, i don't care they are losing money look at way fair and trulia. so many companies don't make money and people love them >> we don't talk about sea port global, their target is 42 >> why don't they make it minus 7. >> and their general take is they believe structurally people are going to own cars and they'll ride share as a supplement >> this is not true. >> it is very clear from ju

just -- i got parking lot analysis now can you imagine parking lot analysis in major cities it is down because of ride share. 39% of this market is lyft 60% is uber. so i thought that what would happen is this is where the deal is done they'll raise price and they'll wipe out the yellow cabs everywhere when two different companies going at it, they're going to end up with good pricing i don't know where the people say i will -- this thing is in free fall and it has to find level. >> look at this wall graphic we remember the day after the facebook ipo and lyft's performances under shooting that >> i thought that the retail

buyers would come back they obviously had no staying power. there is a tremendous number of people in a shortage it is obvious that the buyers were waiting for someone to say something that would be listen, this stock should be bought. they did not get it. when super global determines, we are talking about sea port global how about sea port domestic honestly where are the buyers the answer is wow, they botched this you can say jim, you botched it because they did it right and you bought 72 at hold. i would say shoot me -- well don't do that, don't kick me i never kick my dog. >> andrew sorkin talked to lyft's cofounders a few days

ago, take a listen >> i mentioned elon musk, he said the public mark et is a terrible place to be if you are trying to grow a business, why not stay private >> we are ready to be hold accountable and excited. more people are maybe surprised to see the numbers that we are putting out and i think this is a great part of the process. it was not a goal or a milestone along the way. we feel like it helps us with additional access. >> you don't think it convinces some companies to not pull the trigger, do you? >> no. listen, you got to get better control. you lost control in the beginning and did not release the buyers a lot of market buyers, the public was not no, i think that these unicorns are going to plow through.

billion be other brokers handling these deals we can't have this happening there is too many good things happening. delta just reported an amazing number delta, i thought delta was doing terrib terribly there are so many good things happening, except for walgreens. don't let this be -- let's get a duo and look at lyft and see how badly it was priced and let's do something else and let's get these ironclad buyers come in. now it is possible why there is absolutely a lot of people who lie and says hey, we are buyers and they're nowhere to be seen at certain point this thing is reversed and will reverse

violently. that's the short ending a it is highly unusual to see it happen, this is really bad >> you think it will bounce today? >> too early if you ever want another chance, you better come in and give us a buy order right here or we are going to make it so you are in the scarlett letter or whatever. this was a disaster. i didn't see it. i raise my hand. i am in the back of the class and i am going to take the d i am going to take the incomplete because it is too early, i can drop it and it won't hurt my transcript >> the tapes survived. we are coming off for the dow since mid february dow jumps 330 points and walgreens is down sharply in the premarket after missing with results and cutting full year

guidance ceo pessina says, "the market challenges and macro trends we have been discussing for some time accelerating resulting the most difficult quarter." a l cvs came out -- walgreens must be okay. they are not okay. international and wholesales and the back of the store and front of the store, everything is bad. >> retail comp is down and as we should have said at the top, adjusty is flat. >> the old rule was if you are within five sets of missing your

numbers or 5% of some case it used to be an informal thing you have to come out this is lyft of pharmacies we have to move on this is amazing. they even have the benefit of riding >> as a share donor? >> cvs is bad. i can't believe it why don't they take it out of the dow. >> it is going to pinch the dow. >> they mention reimbursement number, is it reimbursement or as they put it consumer market challenges in the u.s. and u.k >> i was thinking it was amzn. it sounds like am medicine. he said we are not being

challenged by amazon and it is possible the back of the store is no good as larry says. the front of the store, do you think target is taking share but that's cvs walmart is very aggressive really, really aggressive and everybody knows at the front of the store is what you can get on amazon the same day. i would soul search if i am walgreens right now. why did target manage to beat amazon th they're not on the case. larry merlo, look, we got to buy in we got to be a healthcare store. house tobacco, guys. >> in the retail sales number we got yesterday, clicks over take brick the first time on record as total retail. >> i think other than ollie's

bargain score that you did not have on the omni channel >> these numbers indicate a dramatic decline of the number of people going to walgreens where are they going we got people coming in from aetna when they do the remodels, where are they going from walgreens? they're not going across the street it is entirely possible that they are going to walmart. it is much more likely they're going to amazon. when you see the amazon number is up, you have to believe they are hurt these numbers are repulsive. honestly >> we'll mention more some of these price cuts of whole foods and what it may mean >> there you go. >> when we come back, the dow get as new member today.

jim fitterling is going to join us >> amazon is planning price cuts for whole foods. we'll talk about what it means for the company. best day for the dow since february 15th, march 11th for the s&p. future is pretty steady. we'll be back in a minute. ♪ ♪♪ ♪♪ ♪♪

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amazon is planning to reduce prices on items of whole foods according to the wall street journal. the cut affects more than 500 products and improve on produce and meat we all remember whole page paycheck >> i have been waiting for this. one of the things they are talking about doing is opening new stores but they have been competing against whole foods. they cut the price back to it won't compete against others i love that they hate, hate

walmart. walmart is the biggest grocery chain in the country it is not just no longer just stacks of twinkies you use to go to their grocery isles and it is like non-organic. here is like pesticides. now they have natural organic. they hate, hate walmart. amazon will stop at nothing to take away the share that walmart has gained in grocery. this jet that walmart has, one of the things that millennials as nutty as they are, they are willing to accept people to come to their own house and put things in refrigerators. that's what walmart is doing you put on cameras the millennials, they trust guys

come in because they are so darn lazy they're in their house when the guy comes in i had it with millennials. >> delivery is not efficient as pick up is we know little of the model that amazon has >> yes, i think amazon is trying to figure it out itself. my sources indicate that whatever walmart is doing, they'll come on. >> meaning they we don't waon'to price. >> when you go into walmart, it is like the old days they have a whole wall of mustard for a buck how could you not - even if you don't like it, you got to have it it is the battle between walmart and amazon, has kept prices

down these guys are doing everything they can to take share which is great for the consumer we need to jay powell go to wall meri walmart. they're not repulsive anymore. walmart is actually excited to shop at. they're giving you the cooler. they have the best coolers >> jim, you mention delta is up 5% >> how do you like that? >> they do see q-1 revenue at 7 and traffic is up 5.3. how are they doing this with oil at 62? >> there is superior operator. that's a great number. >> yeah. >> maybe the answer to the transport problem here >> yesterday the rails were great off the china's numbers. it is. that's a wonder. it is really terrific. boeing by the way expects the

737 max fix in the next few weeks. at least southwest and american expect to have the plane grounded longer. >> if you notice southwest, they have that stock has held the 51 level. it is not coming down. i think people want to give them a pass i just don't think that's right. but, they're not as good or operating like delta delta reminds me as steven se l segel. >> it is a real-run firm >> it is incredible. >> we'll get cramer's mad dash and count down to the opening bell we'll talk to the ceo, jim fitterling and along with lagarde. we'll be bacin mutk aine. when you rent from national...

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seven minutes to the bell. jim is looking at facebook deutsche is going to 200 >> how do you like this? before mark zuckerberg became public enemy one and two i think what's interesting is they are saying instagram is the driver i think a lot of us feel that way.

10.8 billion of incremental revenue in 2021 because of the check-out with instagram i am so glad they mention this one of the things we hear from consumer package goods and retailer is, if you are not on instagram, you are not there a company checks their instagram constantly this is where all these influencers are and thought leaders. i laugh at my age until i see some major company do you see how many thought leaders we have? i am like you are kidding me >> grown-up men and women. >> the ability to shop in the app rather than be directed to another company. >> sandberg has done such a great job on direct response ads. let's give her her due here. this is how you reach younger people she has that down. so now mark zuckerberg has come clean and now he has the

manifesto and the power to be honest he had dishonesty before this is the kind of research we'll see. deutsche bank is no longer afraid to be affiliated wit with -with -- with -- it does help when zuckerberg issues, ewe are not going to sell you out or have the russians buy the elections >> we should start calling the company instagram. >> yeah, why not i will make that change. >> we'll talk to the ceo of dow when he rings the bell, don't go anywhere heading into retirement you want to follow your passions

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off "the wall street" journal. the market was up big before you even saw the u.s. pmi. it is china. the portfolio managers in country worships at the order of china's growth what people have to recognize is the incremental growth that comes from 3-m or emerson. most of that growth is china once you see china is back on. look at fedex. remember how bad so-called fedex quarter were look at china, look at how good it is for them if they get china -- we get brexit that's the worst situation for brexit because they got to figure out what the taxes.

>> the time this morning, brexit is already happening for some companies if you know what i mean >> i disagree. when you go to the airport, you see if you are -- we don't know what to calculate for you. they got to get brexit over to them that's just that train line that goes from california to the east it was all about china that's very positive there is the big bowl. we'll talk to jim fitterling in a moment one more note on brexit. parliament failed to endorse four separate proposals.

>> it is unbelievable. the current brexit date is ten days away. deutsche is using their base >> i will tell you that would be something. there are a lot of people who feel the following once we get out of the way, we'll be fine. i think that's the case for the stock market they import a lot of food. i mean what's the tariffs? no one knows what the tariffs are going to be. i think people are dead wrong that this is built in. i was doing something for cnbc yesterday, we are talking about regulations and how opaque it is you don't know if you violated something. we lost $100 for olive garden. i mean there are rules over

there that are not just nut job. >> yes >> it is like twice the price there. there is just so much regulation and now it is going to be a new level of regulation. that does not help >> yeah. >> we'll keep our eyes on the amazing story over there >> i know you want to talk about a name that's leading the s&p right now. lam web weston they have tremendous institutional business it is remarkable this turns out to be the gem can you believe it but, this is remarkable.

my hats off to them. it is extraordinary. >> this is frozen potatoes and food processing. >> you know what all the millennials like they love the frozen food isle because it is cheap, cheap frozen potatoes. i like the frozen potatoes they also do a lot of good service stuff. it is not expensive stuff verses its growth rate. it is the highest verses other than mccormick when it comes to multiples. snacks are big pepsico is still the king. look at that stock, it is remarkab remarkable >> seems like you mention it everyday >> i have to this is all about have's and have not's kellogg gave away -- they're the

classic buy high and sell low? campbell no realtime traction yet. i used to write obituarieies whn i got out of college i would have dash this craft heinz in a second. >> it is an ugly chart >> it is horrible. they had products that people actually buy it is not all bad. they do stand for -- you know what the millennials hate? the pantry i am going to lock them in the darn pantry. grow up. they got a door dash and post meet that's not my generation we actually cook or go out >> dow is down 92. a lot of that is going to be wba, down 13% now. >> i mean i am looking for when this is -- looking at a 10-year

chart. >> it is the lyft of drugstore everybody hates lyft walgreens is remarkable how bad it is and it is a secular decline. look at best buy they manage to beat amazon but look at bed bath this is becoming a bed bath situation. >> super, a lot of cheers for dow obviously. replacing dow duponte debuting here in a three-way split. >> which is taking way too long. >> we'll hear more about cortiva. >> it was doing terribly because of the floods and a special performance looks like it is doing okay we'll speak to fitterling, his division is not that great if you are taking lyft, you will

be getting a call from me. >> jp morgan >> you will get a call for jaime dimon? are you shorting lyft or banging it down? we'll find you it is a take-in situation. it is going to be a take-in situation. we'll find you jamie has a special set of skills, it is a nightmare for people to knock it downright now. sfo >> we'll keep our eyes on lyft >> reuter apiece that the damage to these farmers are remarkable because they had so much in storage because of things like the trade war with china and all of that corn and pitchers of it in the water >> the president will have to go to that area and write checks to the farmers because wholly cow, they are decimated no levees. it is every single grain and

there is the protection business it is just like that scene by northwest. i know you love the movie. there ain't no crops right now what a great lie >> incredible. a couple of things on the media. rosenblat -- >> $9 billion on the new slate they think it is going to be great. we believe netflix's first quarter performs very well the umbrella academy, i have not seen that. sex education, i took that class and marvel, "the punisher" which i did not like i have not watched all these >> you will once we get this server up and running, right >> you know who's watching

these? they watch these and play video games, a generation of deadbeats known as the millennials >> for $15 a month >> they love netflix.net fliks netflix. this over weights on netflix competitor fierce over done. if you couple this with facebook, you're starting to build. you just need amazon and google. it has not happened yet. how is lyft doing? hated lyft oh, i screw it up. therefore, i am going to wear a hair suit tomorrow >> you are not the only one that's surprised >> i am the only one that matters. i read it. you think it is all about you. >> well, i read my twitter come, lyft is going to bounce today. well, that's great

just bring it on, jim. 69.22. i am going to watch it airlines are doing great delta is at 4% phil lebeau is with us talking more about delta happy 20th anniversary at cnbc today, remarkable. >> thank you let's talk about delta this is a major raise in terms of the earnings guidance for the first quarter. they were guiding investors to inspect 70 to 90 cents per share. the previous estimate that was out there on the street, consensus was 80 cents per share. i heard jim mentioning earlier about q-1 revenue. take a look at what they did with the corporate business. the business traveler if you will revenue up 2%, they make a special notice saying healthy corporate revenue. we talked about this for some

time i know there is a lot of focus, there is always is on the leisure traveler, it is the corporate revenue and booking. that's really the airline of the bread and butter in terms of the margins. remember it was a week ago where this stock was down 47 or $48 a share. it is getting healthy bone and now it is up $54 a share guys, back to you. >> all right, phil, thank you very much. >> well, this is exciting. we have a new/old company. dow inc., this is jim fitterling first of all, congratulations. this is an exciting day for you, jim. >> thank you, jim and carl >> how is this new dow different from the old dow other than jim, other than it is more focused? >> well, what we try to do is

put businesses to rgether out o the combination that has a similar business model and similar markets. one of the things we want to do is make it easier for shareholders to understand dow was too complex. we did not understand how to cop rate these things. these six businesses and packaging and infrastructure and consumer goods and we are focused on those businesses and it is a good growth company. >> you also said on the call that the economy is softer than last year. if it softens further, i want to know the highest in the dow, $2.1 billion is it safe if the economy continues to soften? >> when we put the dividend out there, we want to make this the most compelling in material space. we got a great portfolio, it grows greater than gdp, most of our product lines, fourth

quarter things slow down a little bit you had autos and slowing down and you had china slowing down and trade and then december was kind of everything stopping the last two weeks i don't think that's the future but we got to get through that china is going to grow the world is going to grow demand for our products is going to grow. that dividend, we got two to $3 billion coming and we got a billion of synergies is going to come out we got the horsepower to support that dividend. >> crude oil is coming off the best quarter in decade 62 almost today on wti how is the new company leverage or exposed one of the things that hit us and fourth quarter was oil went down 40% when that happens, our based materials that we use to make everything gets compressed we saw that margin compression

oil to natural gas ratio is a big deal for s as oilexpands, we can move prices up. the price have not moved as fast as we have thought it is no t a bt a big deal if you move through the year and as china comes back and stimulus kicks in, you will be off toth races. >> okay, we got to go here, all right? looks like it is going to be a trend. what does it mean if each state adopts a new york state policy to your business >> well, i think the problem that we are dealing with is a plastic waste issue. it is a waste issue in general and nobody disagrees with that people are tackling it in different ways some people are tackling it with nuance ban like a grocery bag or a plastic straw. those are not huge demand drivers for our business

plastics have grown so fast because of sustainability. that's been the reason the global market for plastic is 400 million tons, it is double in the last decade lighter and faster and stronger, that drives plastic growth we have to tackle waste issue. >> i know you put an alliance together and i know this is central for you. everybody i know who knows and this is incredibly important let me ask you the question. why should it be made? why should you make the stuff that's not landfill or that's in that size of the ocean i am asking these questions, jim, i know the answer because i know you this is what my daughter is asking me to ask you how does he live with himself, that kind of stuff >> these are materials you touch everyday the business of chemistry touches 99% or 98% of everything you use everyday, your computer or your drive.

it does not matter if you drive a combustion vehicle, they all have a problem, they have a weight issue the only way you are going to make it lighter is composites and composites of plastics that's driving the growth of materials. food packaging is one of the biggest growth medical for us. banning things is not the answer dealing with the issue e of the waste problem is the answer and creating circular economy solution what do we do with that waste at the end of life. most people think it has no value. it is not true if they think it has no value, they throw it away or throw it out the window we can't have that it can be turned into more useful product and have another life that's the mindset shift that we've to make. >> how do your alliance, $1.5 billion, this is something

you think about evidence this guy is not some guy who wants plastic thrown along the way. how do you make it so we can recycle better in this country and how do we address of china responsible for so much of pollution. >> if everybody thinks there is no value to it then it goes away michigan, if you buy a bottle of sh soda and its got a deposit of 10 cents on it, people take it back you put a value on that and you change the equation, you don't have a waste issue right now a lot of municipality in this country make revenues off the landfill that's what they want to do. the cheapest thing to do is landfill it. if you don't want to do that, we got to change the equation people are willing to step up and be apart of the solution if your approach to this is to ban everything, that basically means you are taking away

people's choices and their rights to choose and their freedoms if you turn it the other way and say you can use all of these things and make your life more convenient and sustainable and easier but i need you to change the behavior on the consumer end, what you will find is most people will step up and say i want to be apart of the solution, i don't know what to do >> generationally removing in that direction you sound optimistic on macro, is that a resolution on china trade? >> chelearly you need u.s. and china. they got to be going what happens at the end of last year when china took a lot of liquidity out of the market, that hit a lot more medium and enterprises and more individuals than we anticipated. they came back with stimulus it was more income tax and b.a.t. most of us are expecting towards

the back half of the year things are going to improve it was a slow start to the first quarter. they're back in the market in march. i think we got the chance to build some momentum here oil will be constructive and global demand is good. we got a lot of growth coming in, southeast asia, india and african continent is up and coming i think globally if we don't create an economic downturn, we are in good shape. >> full disclosure, it is the highest yielder and a lot of this because of you and your leadership i appreciate your patience and questions that i think people ask me and i want people to know this is what you live and breathe. you want this problem stop the pollution and you want to give people a choice. >> my team that's here and we got the best team in the

industry every one of them is motivated to make a difference everyday. they're not out trying to create products that create problems. they're trying to solve problems we got a good team and we can tackle this issue. >> i want to thank jim fitterling new into the dow and you committed to the balance sheet and sustainability i thank you so much. >> thanks jim and carl >> let's get to the bond pit with rick santelli >> good morning. today we have curve steepening but it is steepening with rates going down they're going down faster and shorten. 30s are basically minus 1. look at one week of tens, evidence of the last nervous environment of the dropping rates that finally stabilized. the investment grade, etf, it

just skyrocketed the best levels basically since february of '18. let's look at our barclays, shall we in hovering in the 400 camp it i hovering in the 4000 c camp. finally, dollar index. here we sit not far from 97.40, the highest on a closing basis, 97.67 from early march of 2019 carl and jim, back to you. when we come back, roger mcnamee with reaction to the movement in shares of lyft since the company's public debut on friday walgreens taking some out of the dow, but down only 48 points dow, duncan just protected s his family

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keeping a very close eye on shares of lyft appeared to get a bounce a few moments ago.

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the latest inisn't just a store.ty it's a save more with a new kind of wireless network store. it's a look what your wifi can do now store. a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. jim, what's on "mad" today >> what a fiery show we just

had. not about friends, about money. >> that's exactly right, jim always a good time with you at 9:00 a.m we'll see you tonight. riinwhen we come back, imf chief chste lagarde. with the dow down 45

♪ good tuesday welcome back to "squawk on the street." sara eisen is on stage right now with the imf's christine lagarde. markets pinched by this profit warning out of walgreens alliance shares of lyft under pressure today after a brutal second day of trading yesterday. >> walgreens boots alliance lowering its 2019 outlook. >> as we said, imf managing director christine lagarde with us for a first on cnbc interview ahead of next week's world bank spring meetings.

the second quarter kicked off with the dow saying the best day in about six weeks joining us, jonathan goll leb. good to see you both you're among the most bullish on the street i don't know if we'll get much of a debate. >> having me with jonathan is a waste of time. when i get bearish, i listen to him. the bottom line is, everything is playing out according to plan the second half, up hift we're looking for, you're seeing the green shoots or green sprouts as fred smith of fedex would say, all over, and policy remains supportive >> jonathan, you recently tripled your earnings for the year, but lifted your target is this on the fed pivot or something else >> first of all, on the earnings side, two things, first of all, oil prices have bounced recently, but below where they were recently. that was the reason on that. and also apple

it wasn't a broad-based problem with earnings and we adjusted it as far as the market is concerned, i don't think it's about strong growth and good economics. i think it's the fact that the risks are coming down. the expectations are for two fed rate cuts before 2020. recession risks are lower which means the cycle is likely to go on a bit longer, and china, as a risk in terms of trade looks like it's less problematic than it was that i think is what bullying markets. >> jonathan, i hate to principal and income your bubble that's exactly what our point is, five more years this growth cycle probably lasts a while -- >> five years. >> five more years the reason for that is policies are far more supportive. moderating growth but no recession, that's what gets the market higher. >> so we're not debating >> we are not. >> when you look at what has

performed the best year to date, it's been tech stocks, industrials, some of the cyclicals. are those still the places for investors to be paying attention to or should they rotate to something else >> at least in my judgment, that's still the place to be cyclicals is where you want to be as i said before, the second half of the year from a growth perspective looks much better in kind of a trend growth rate environment, companies that can deliver significantly better top line and earnings growth, that's where the market is going to go. those are the sectors to focus on. >> a little different take if you take a look at what investors consider tech which would include the googles and amazons, it's really been semis and tech hardware leading the markets which look more like an industrial sector. i think as volatility has come down, it's been a cyclical trade. i think as this kind of moves through the latter half of the year, i think it's going to be more defensive

in the tech space, i think hardware is probably going to lag software and these other areas. i think the service names will take more of a leadership role areas like health care which are a little more defensive i think will do better in the second half. >> if everything is so rosie on the back half, when does the fed assert a neutral stance? why wouldn't that be a risk. >> let's be careful with the world rosy what we're talking about is getting back to the trend growth rate of 2% that's not an environment where the fed necessarily has to tighten, especially if inflation remains as controlled as it is today. >> you're talking soft landing in a sense >> absolutely. >> as are you? >> i am. i think that's the key story here when i go into a meeting and people are optimistic, lasts year we had 2.9 gdp. a lot of folks saying 3%, we'll

keep that. i think we're slowing, but the key is not towards recession, toward something that is more tepid and that will cause the cycle to extend and that's extremely healthy as opposed to what people want which is the fast growth which will burn itself out. >> how much does all this hinge on trade talks, either china or the eu >> i think trade talks are a wildcard they have the potential of taking the market meaningfully lower. the likelihood they take the market higher with a positive result, i think that to some extent is already priced in the market. >> i'm noticing oil is back above 62, gasoline closing in around three like 50 cents from january when do we start worrying about that >> the last time oil prices crashed, we never got that bonus that we were looking for in growth i think it's the same thing on the upside for oil prices as well it basically comes out of savings far more than it comes out of consumption. >> which is abnormally high already. >> exactly

it will come out of savings, but not by consumption getting cut. >> if you look and the s&p 500, not the economy, it's actually reasonably oil price sensitive to the upside because you have a lot of big oil companies as a matter of fact, if you look at the s&p compared to non-u.s. stocks, you have more of the drilling kind of names, exploration names that do better when oil prices are higher oil prices being up, unless it's really disruptive, which it's not, it's probably a positive, not only for stocks but also positive for the s&p over equities on a global basis. >> i go back to my earlier question how much of that hinges on these china trade talks versus the fed? >> i have a different take on the china thing. what i'm hearing investors saying is we just want things to be quiet the reality is we don't really have a great trade deal going on with china we don't have access to their markets. and we have intellectual property issues.

it may be better for the markets over the long run for us to fight this fight harder, see a little more volatility on their term and end up with something better everybody seems to want that to magically go away and walk away from the fight i think we're going to and i think it will be a mistake. >> i think while that's a good thought, that's not going to happen the reason is because in a slow growth environment, neither side wants to take significant risk. >> not to mention we have an election coming up in 16 months. >> exactly what they lead to is continuous engagement on the trade front. the trade issue is not going away because we have a small trade deal it's something that will be coming back to us all over again. >> when the president said there's a red line, and if china doesn't give us what we want by march, we're going to have this biggesting lags and he walked away from it, the market took it as, this issue is off the table. you're exactly right, it's not that the discussions aren't going to continue, but in terms

of a downside risk to market, i think it's minimal as far as china is concerned, to me the big question are they, because of economic weakness, are they going to do a larger stimulus plan which would change the tone of the market towards being more pro cyclical. i don't think so but that would be the big china question, not trade. >> that's good good to see you guys we got something out of that when we come back, imf managing director christine lagarde will join us on cnbc as we go to break, a look at the top performing names on the s&p. airlines led by delta's good guidance back in a minute the latest innovation from xfinity

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like never before store. the xfinity store is here. and it's simple, easy, awesome. . lyft shares trying to hold positive price action this morning. the shares are, as you can see, down in the red in the early part of the session, below the ipo price of 72 yesterday. some are voicing criticism of the dual class share structure as well as worries on potential profitability. our next guest, richard clayton joins us to talk about what's happened over the last few days >> pleasure to be here. >> what was your these sis about the name going into the issue last week? >> there are two concerns we had and we think were shared by many other institutional investors, particularly pension funds the first was that lyft chose a governance structure in which

the two founders of the company were getting basically ten times the voting power of ordinary public investors we objected to this. we don't like to see dual class structures like this in general. the lyft structure seemed particularly egregious in part because there was no sunset on the extra voting power for the founders many other companies that have introduced, gone public with the dual class structure put a seven, five or even three-year sunset on the extra voting power. beyond that, these lyft founders had already sold the bulk of their shares in the company to private incevestors and they had been holding the company on a one-share, one-vote basis for many years in our view, the stake that the founders had in the company was so small, below 7%, that it really was not justified giving them majority or near majority

control through these voting provisions >> ownership structure obviously a worry. any thoughts about the nature of the business >> indeed. >> their market share, pricing power, long-term viability >> significant concerns along all of those ghengdimensions lyft, as you know, has never made a profit. but more troubling, they haven't been able to cover operating costs. the price per ride is higher than cost per ride the price per ride has been growing more quickly than the cost per ride. it's hard to see how a company will be profitable at some point in the future when it is either unable to charge more than its costs or unable to get costs under control so they're growing less quickly than prices we believe further the frustration that many lyft drivers have over the very low return that they end up getting from being a driver once you take into account all the fixed

costs that they have for the car and fuel and insurance, there's a lot of efforts around the country to introduce rules and regulations on ridesharing which make certain that delivers are going to be earning a viable income we've seen that with the minimum wage rules in a few different states we're seeing that with the changes in the interpretation of who is an employee and who is an independent contractor in california and a few other states we're seeing that -- concerns around ridesharing not necessarily connected to the driver's pay, but connected to the impact of having so many additional cars out on the streets driving around looking for fares. that's congestion pricing which new york just adopted as well as greenhouse gases. >> richard, i know you're not managing money, but you are advising pension funds when it comes to companies like lyft and those stocks how much of this is a

lyft-specific story in your viewpoint and how much is setting the stage for all these big tech ipos expected this year, other ones that aren't profitable or maybe have questionable business models at least in the near term or have dual class share structures, et cetera >> i think on the dual class issue that's going to apply to any of the companies that choose that structure we have heard we think pretty persuasively that uber is not going to choose a dual class structure. we don't know about other companies that may be looking to go public later in the year. if they go down the road of dual class, i think they'll face a similar level of resistance and frustration that lyft has encountered. in terms of the economics of the company, i think it's something of a case-by-case issue. as you suggest, it's not unusual for these tech companies that establish a platform which faces both consumers and the providers of labor services to operate below cost essentially, to charge prices below cost and not

to earn a profit it's very hard for us to believe that it's a good idea for a long-term investor like a pension fund to put their capital into a company like that when there isn't any credible description from the company itself of how it's going to get to profitability. >> so should other potential investors in these stocks, be it lyft or some of the other names expected to go public that might raise similar issues for you, should they be aware that maybe pension funds aren't going to be investing in these names that's a sizable amount of institutional capital that may not be coming in. >> they should recognize pension funds are paying attention to the long-term and these companies don't have a credible theory of the case for how they'll be profitable in the long-term. until they can come up with that, i don't see why pension funds would be putting their money in when we talk to those funds we'll make our point of view very clear i think any company looking to go to an ipo this year has to put together a credible theory of the case of how they will get

to profitability. >> way oversubscribed going in although it's down, it doesn't seem to be so extreme that it would knock the habit of private companies from demanding these types of structures, don't you think? >> but they only floated 30 million shares out of about 280 million slaers so only about 10% of the company is trading right now all the private investors that have been buying shares in lyft over the years are going to be looking to sell those shares and making enough of a return on those sales to be able to hit their required rates of return for their limited partners and the funds that have invested there. so if there's not a lot of enthusiasm about buying lyft add a relatively high price given the fact that they're not profitable, i would be very concerned if i was one of those

general partners with an investment in lyft or another one of these tech companies about whether or not i'm actually going to be able to cash out and report back to my limited partners. >> if you had to guess -- if you were managing uber's new issue, what percentage would you take off of the range going in as a result of the lyft action? >> i think you need to have -- again, i don't think it's an issue specifically around the ipo pricing because it's not an issue around what happens in the first day or week or month, it's about having a credible theory of how you get to profitability. if i were uber, i would be making the decision i think, and encouraging other people in the company, to really focus on how we present a credible case that we're going to be a profitable company going forward, whether that's because you're going to be able to raise prices because of a dominant market position, maybe international growth, maybe growth in some of these other segments that the company has moved into, maybe it's a different relationship with the drivers which enables the

company to benefit more from productist. >> anything other than saying we're not going to make profits as far as the eye can see. >> exactly or inventing a new metric that suggests you're profitable because you're ignoring a significant number of your costs. >> richard, good conversation. thanks for your time richard clayton, ctw. up next, wynn resorts could lose a major gaming license. the details on why it's in jeopardy coming up then what new york's new mansion tax means for the broader market dow is dn ow68 points. "squawk on the street" will be right back

a day of reckoning for wynn resorts, boston gaming regulators looking into accusations against steve wynn that could cost the company its gaming license contessa brewer joins us with more. >> reporter: the hearing has just begun we are expecting the investigators and a parade of wynn resorts executives to testify. we've just received the

investigative report hundreds of pages that detail the alleged failing of this company regarding serious allegations against former ceo steve wynn, its founder. allegations of rape, serious sexual misconduct allegations, charges that he continues to deny among the findings, investigators say they determined the company failed to document allegations against steve wynn in the central file executives who knew didn't report the allegations to the board or compliance committees, the company failed to protect employees, didn't apply its own policies to steve wynn in nevada the company has admitted to turning a blind eye preetdly to the complaints of workers. ceo matt maddocks testified that the company turned over a new leaf, separating from steve wynn, overhauling the board, institutionaling new sexual

harassment policies. none of the executives named in the nevada complaint are working for this company any longer. at stake, as you mentioned, this company's $2.6 billion proper, on core boston harbor, scheduled to open in june. maddox and elaine wynn, the largest shareholder, are expected to testify. their own individual suitability is under intense scrutiny. of the 11 original qualifiers, they're the only two remaining ones we'll be watching this throughout the day and bring you updates as we get them we're expecting for ceo matt maddox to take the stand and testify. >> contessa brewer, thank you. now let's get to don chu >> walgreens alliance by far the worst performing stock

off by 12% in early trading which means 46 points of the dow dropped today just because of walgreens mating at this stage much of that dow move is pretty much walgreens the move lower also having an effect on the etf market overall. take a look at this. the most notable ripple effect is on the spider dow jones industrial average fund, diamonds walgreens a bigger part of other etfs from consumer staples, retail-or yebted funders like the spdr etf 3.6 waiting in that particular etf. smaller investco, ticker rhs has a 3% waiting there smaller retail-oriented funds also have relative bigger exposure to a name like walgreens. one other place to keep an eye on, cvs health, its rival in terms of pharmacy benefits and

retail, moving lower today in sympathy to what's happening with walgreens staples, retail, health care oriented etfs feeling the effects because of the walgreens moving down 12% today. when we come back, art cash ham join uses with his thoughts. an interview you don't want to miss, ginni rometty joining us at 11:00 a.m. eastern for an exclusive interview. "squawk on the street" will be right back

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good moncht i'm sue herera, here is your cnbc news update at this how president trump suggesting he'll defer until after 2020 his push for a republican health care plan to he place the affordable

care act he tweeted congress will vote on a gop plan after the elections, quote, when republicans hold the senate and win back the house, end quote. u.n. chief antonio gutierrez meeting egypt's grapd i'm man. he expressed solidarity denouncing hate speech as well as anti-semitism. new zealand's lawmakers voting overwhelmingly in favor of new gun restrictions. the vote was the first of three they must pass before the bill becomes law. some encouraging news about prostate cancer. a new study from the american cancer society reveals the disease has decreased or stabilized in most parts of the world. the u.s. had the largest drop over the past five years due to the growing use of psa screening tests. so a little good news there. that's the news update at this hour carl, back downtown to you.

>> sue, thank you very much. welcome back to "squawk on the stree street". sara eisen is in washington where she'll soon join imf chief christine lagarde for a first on cnbc interview an hour into the trading session, dow down 63 a lot of that is walgreens boots alliance s&p relatively flat. that is a big discussion today, morgan, about whether or not holding these levels is a victory for the bulls after the big rally yesterday. >> dow transports again, the outperformer, head by airline, the outlook from delta as well some auto sales today. let's get to phil for that. >> we get them on a quarterly basis from general motors. for the first quarter, general motors sales dropped 7% here in the united states. the average transaction price

did increase up to almost $35,800 for general motors a couple of interesting notes, car sales, remember gm is more exposed than its competitors, car sales alone down 21% in the first quarter while they transition over to the new versions of the silverado and sierra, those sales were down 9% however, the transaction prices up more than 8,000 on the new versions of those two pickup trucks. >> key data to keep an eye on. phil lebeau, thank you the second quarter kicked off with a rally yesterday the dow down fractionally about .25% joining us is uvs director of floor art cashin how would you characterize what we're seeing >> the problem for the bulls is they needed to take full control

by blowing away this idea that we may be seeing a rollover on top of the market, even as well as it was trading. the problem, morgan, is that we haven't blown out the brand new highs. that has caused presentation one of the things traders will look at here is what is the followup on lyft, the selling on the second day, the underwriters unfortunately timed it to start trading on the last day of the month which meant that, if you were a hedge fund and wanted to flip, you flipped it and had to report that in a report that was due out virtually the last couple days. if you'd like a big allocation in uber, you certainly don't want to let them know you flipped it out that's why we saw selling on the second day, not on the first day. now traders are going to watch, can they circle the wagons here and hold on the it were to develop a full-blown flush down,

it would affect some of the rest of the market. >> that's a key point you make a number of traders and strategists say the fact we saw lyft close at the lows of the day, the selling increase was ominous for the stock. the fact that hedge funds, the last day of the quarter, that hedge funds are involved, maybe not so ominous >> i discussed with bob piz zani before the stock ever traded i guess it was too much inside wall street. i saw a lot of pundits come on it means this, it means that it really didn't mean anything it just meant it opened up on the last day of the quarter. and that moved it. if it were to trade down in the next couple days in a rather severe manner. in the meantime, the bulls need to make not just nominal, but real new highs that will give them control back

from the bears >> retail sales, durables, obviously last month's jobs number, no great shakes. i assume you believe it would take a long time to convince the fed to get restrictive again, right? >> i think so. i've held that position, as you know, for well over a year and i think that there's still in a position where they might want to cut as we get closer to the year a small camp we have, joe livorno is seeing disappointing economics. sri kumar is looking for the ten-year to go down the 2.25 it's an uphill fight here. we've been living with data out of china, hopes out of china, and it's been more that than the

american economy. >> art, thank you. >> my pleasure. new york passing a new mansion tax putting pressure on the real estate market robert joining us with that. >> sales falling 3% in the first quarter with the lowest number of sales in a decade total sales down 36% from their peak of 2014 that decline has now stretched for six straight quarters. the first time that's happened in more than 30 years since the data started being collected inventory was up median prices are flat discounts are steeper. what started as a high-end correction with the glut of expensive condos and fewer foreign buyers is now cascading down to the entry level market of under $1 million. now a 19-month supply of new construction, that's up 57% from last year. it's not likely to get better any time soon, adding to the pressures from the new federal tax loss, new york state

approved a new mansion tax on homes priced at $2 million or more this is a relief since the state had been considering a tax on second homes, an annual tax. this is a one-time tax at the time of sale it's a sliding scale starting at 1.25% on homes between $2 million to $3 million. it rises to $4.1% to homes over $25 million. it's expected to raise $365 million a year ken griffin would have paid a $9.9 million tax on the $238 million property he bought that actual sale boosted the entire average sale price for all of manhattan by $112,000 in the quarter to the average sale price for a manhattan apartment at $2.1 million. it will probably fall back again in the second quarter. still interesting, that one sale can skew the whole average for the whole city back to you. >> that's really saying

something. also saying something about timing, given the fact we've got this new tax in play robert frank, thank you. when we come back, imf managing director christine lagarde joins us ahead of next week's world bank meetings it's equal payday. we'll take a look at which companies are moving closer to equal pay and which still have a long way to go "squawk on the street" will be right back

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jeremy segal says there's one thing that could derail the rally this year. trading the interview at tradingnation .cnbc.com. mover "strauk on the street" is coming up.

welcome back it's equal payday which is the date on the calendar each year that signifies how much longer a man has to work to receive the same amount of pay a man received on the previous year. according to a new glass door survey, payee quality won't be reached until 2070

jul julia boorstin joins us with the latest. >> reporter: progress has been so slow that it will take another 50 years or more before pay equity is actually reached the pay gap numbers are pretty striking here. women earn on average 79 cents for every dollar that men earn in the u.s that's according to the new glass door survey. that's if you look at the total. pointing to the fact that men tend to dominate in higher paying industries like tech and they are promoted faster still, even in the same jobs with the same experience, apples to apples comparisons, women make about 95 cents for every dollar men make on average some industries, though, do have bigger pay gaps than others. media and retail actually have the biggest pay gaps, 6.4% for the same roles with comparable qualifications according to glassdoor. finance and technology are in the middle of the pack with 5.6%

and 5.4% respectively. biotech has the smallest gender pay gap of just 2.2% a new report out today from a company called equi leap ranks the top companies when it comes to pay equity. general motors is number one with add lent technologies number two both have pay gaps of less than 3% across all levels of their companies. they publish pay information for three pay graphics citigroup, bank of america and johnson & johnson are also on top the list because of their detailed published pay numbers as well as strategies in place to close any remaining gaps. one of the reasons they focus so much on transparency, and this is such a key issue moving forward to close the gap, the more companies disclose their pay gap numbers, the more likely they are to do something to

really close those gaps. guys, back over to you. >> really eye-popping data, julia. thank you for bringing that to us today. up next, imf managing director christine lagarde is live with sara for a first cnbc interview. that's next when "squawk on the street" continues.

. let's get over to sara eisen live from washington with a special guest. sara >> thank you very much i'm here at the u.s. chamber of commerce with managing director of the imf, christine lagarde. nice to see you again. >> lovely to see you, too. >> giving her preview of the meeting next week. characterizing the global economy as in a delicate moment. what does that mean? >> it's a delicate moment because the growth is losing momentum, and it is losing the momentum that we had hoped for pretty much across the globe we have 70% of the global economy slowing down compared with previous forecasts, it's clearly going to be a little bit downgraded i think added to that, there are signs of hope coming up. so we forecast that 2019, second half, early 2020, should be better place

but with clear downside risks which have to do with country-specific cases what will happen to brexit how will it impact the global economy, the uk economy, of course and europe. tensions on trade which clearly have resonated negatively on the confidence index of many economic operators which is still up in the air. we have good noises, but nothing is yet certain and financial markets that are a bit jittery. they are quite positive at the moment because the financials are conducive to that. but possibly at risk of change. >> we saw how sensitive the market is lately to any piece of global data. got some green shoots out of china manufacturing, out of u.s. manufacturing. are you seeing any early signs that we could be looking at a bottom in terms of the worst of the global growth picture? too early?

>> what we know for certain is the upswing that we forecast for late 2019 and early 2020 will have to do with country-specific cases. when you look at countries like iran, venezuela, turkey, hopefully out of where they are now which is very low, we might see a positive impact. but no unless trade tensions go away and go away for good and across the board, which would then clearly boost confidence which would clearly encourage investment, we are very concerned about this very delicate moment where policies are needed on all fronts. >> you've mentioned trade tensions going away. last time we spoke a few months ago, you were pretty optimistic that a deal would happen between the u.s. and china, that there was commitment to making a deal. what's your level of optimism these days >> a deal is a deal is a deal.

and it's only done when it's signed, sealed and delivered as the old-style british lawyer would say, and it's not there yet. i'm still optimistic it's my nature anyway, and there is a clear impetus, determination on both sides to move forward it's vitally important because if there was no such deal, clearly it would be a very negative impact on both the chinese economy but the u.s. economy. we've done some modernization, and we figured, okay, if there was a 25% tariff increase on all trade between the two countries, u.s. and china, and there is a clear negative impact, minus .6% on the u.s. economy, minus 1.5% on the chinese economy given those are the two big giants currently, if you have that kind of negative impact on both, it would weigh heavily on the global economy and would be

bad. >> what would happen if we did get a trade deal, but some of the tariffs stay in place as have been threatened >> that's for the negotiators to decide i understand that. hopefully -- the first thing fii to have less uncertainty, number one. because the business community can adjust but they want to know how much, where it is, for how long. if there is a prospect that tariffs will eventually be removed over a period of time, maybe, that's already less uncertainty. if they understand that there will be respect of intellectual property and enforcement of the rules, that's less uncertainty. if they understand that transfers of technologies will be properly addressed and

reduced that's less uncertainty. all of that should fuel less of that trepidation that we see at the moment. >> you mentioned partly because of trade, the global outlook has worsened, what about the u.s.? is the u.s. still outgrowing the rest of the world? >> as i said,s movement of deceleration has affected all countries, including the u.s. the u.s. was immuned to that for a period and in january, we did not downgrade our u.s. economy forecast. now it's pretty much across, as i said, 70% of global economy is affected by this slowdown. that's what we are seeing, yes. however, you know, clearly the unemployment number is rock bottom. the markets are quite satisfied but that's, you know, with a word of caution and i think there is a precarious moment which leads us to say delicate moment. let's watch out, make sure

there's no misstep of policies. >> does the u.s. need a 50 basis point interest rate cut right now as the white house has suggested? >> at the imf we highly respect the independence of central bank and central bank governors. as long as it remains data dependent, well communicated so that there can be anticipation that will be the right way to go. as we've said, you know, if-- when inflation is too low relative to goals, when inflation is not anchored, yes, of course, they should be monetary policy but if it's not the case -- >> we're not there, are we >> data dependent to be decided by the fed as far as the u.s. monetary policy is concerned. >> other central banks have really sprung into action so far this year. in europe they're sticking with the easy -- even easier bank

policies, bank stimulus, negative interest rates. is that going to have an impact? >> they do that if you look at the rational behind it because inflation rate is certainly not at the level where it is expected. they have this 2% expectations minus or plus 2%, close to. they're not there at all. it's much lower at the moment both in terms of core inflation and anticipated inflation, so that's the reason why they're moving in that direction and it's -- we see that as completely legitimate. what we're also saying is, monetary policy alone cannot address the current delicate moment where we are and it requires those, you know, fix the roof please, which means conduct the structural reforms that will boost productivity and that will support long-term growth. that is absolutely needed. >> but how do you think about the longer term implications of

negative interest rates for a very long time and what, for instance, europe has done to its banking system >> ell, don't forget the work that has been done over the last few years after the big financial crisis. a regulatory framework that has now been agreed pretty much across the board between u.s., japan and europe and others. the fact that, clearly, monetary policy has been pretty much left to its own in order to fix the situation, the fact that fiscal policies were not adjusted sufficiently rapidly. we contend that those that are in surplus or are at, you know, this black budget as the germans call it can actually afford to spend more to spend on education, to spend on broadband, to spend on infrastructure while those countries that are in a more difficult situation and have

rising debt have to be very cautious with that. so fiscal policy really needs to be adjusted. those who can spend should spend. those who need to continue to build fiscal buffers need to do that now and it is still good to do so. when the next crisis comes about, they have some space to fight the next crisis. >> do you see any way that the british government is going to be able to come out with a deal before april 12th without crashing out of europe >> i dearly hope so. the consequences of any kind of brexit will not be positive and that's an understatement, but absent a deal, it will -- it would certainly be very, very sad for the economic situation of that country and would have negative impact on consumers, on producers, on the supply chains on pretty much all the trade

relationship that exists currently between that country and the rest of europe. >> then finally, i just wanted to ask about another risk you've been warning about for a long time which is rising debt loads and the u.s. deficit and the fact that we're back to a trillion dollar deficits both political parties in this country really are embracing spending. why is that and why do you think that nobody's realizing the danger >> well, first of all, i think that you really have to look at the situation going forward. how much of those entitlements will come due as people age and will retire and will draw on public resources, number one number two, for how long are we going to keep those very, very low interest rates, for how long are markets going to be patient. clearly, the situation of the united states is slightly different because it has what a former french president called the exorbitant privilege of the

dollar. it gives clearly an edge over all the other countries, but having an excessive weight of debt is clearly hurting any economy and comes a point where interests will move around and where financial markets will lose patients. >> christine lagarde, thank you very much. back to you guys. when we come back, a lot more this morning on lyft's roller coaster ride. "squawk on the street" starts in a few moments. ♪

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