in i did. >> i did too. >> we're going to check the markets but there's not much going on compared to this really anyway. >> just watch the ball roll. watch the ball roll. we're going to run make sure that you join us tomorrow melissa, thank you for hanging out. squawk on the street begins right now. >> good monday morning and welcome to squawk on the street. welcome to a holiday shortened week goldman and city out with mixed results. s&p about a percent from an all time high. europe is green as they clear the way for u.s. trade talks ten year yield near 2.57 this morning. a big day for bank earnings. goldman and city with a revenue miss in the first quarter. shares of goldman are down in the premarket. >> trump's fed bash, the

president doubling down for calls on new quantitative easing. >> and apple and qualcomm's anti-trust battle heads to federal court today. it is another morning for the banks. goldman and city out with results. both banks beating earnings estimates but revenue falls short of analysts forecast and david soloman says they're pleased with our performance in the first quarter especially in the context of a muted start to the year they point out the government shutdown and say client activity improved. >> i liked a lot of what i have been hearing and the key thing to recognize is march was reat

they're doing a lot to say they're cleaner. i think we're going to try to get that down to some level that just a little more -- let's say a little less fierce so i liked it is it the blowout that jp morgan had? they were double everything. >> you thought it was fine >> yes. >> is the stock not justified or investors not justified in selling it a little bit? not much but a few points? >> i think it's pretty clear >> and a return of over 11%. 11.7%. >> it's just an inexpensive

stock. and march being great is the delta that people are looking for. >> add to the list of banks that changed their formats for earnings releases now. >> i assume that stuff will start showing up here somewhere. >> it could be 3 billion 18 months, two years so that shows up in the mosaic i think it's fine. i think the book value supports it the dividend boost was good and the most important thing was marge was great. >> expenses down helps. >> yes credit provisions up year on year specifically goldman related to the consumer. >> which is surprising they don't have that big balance sheet. they are leaning -- they are not having great -- >> no, their effective tax rate

is 17.2% i'd take that. >> would you >> i'd take twice that. >> almost three times. >> i am biased like that and if you are listening to jp morgan what really caught me by surprise was how great i think that every bit as good as march was for jp morgan, it will be for goldman and when people look at that they'll say listen i'm doing rear-view mirror and looking too much in january. >> wells said the mortgage business was looking better too. that didn't help it avoid four downgrades today. >> that conference call was just a bomb drop when they said listen we're really bad interest income for the rest of the year. that's not a goldman call. i don't know i don't think anyone expected goldman to be blowout because after jp morgan it was impossible jp morgan was like what a bar.

but down four? maybe they sent someone downgrades, i don't think they do >> we're nowhere near being done bank of america tomorrow morgan stanley on wednesday. amex on thursday afternoon. >> how do you -- how does anybody really flow back to banks with rates where they are. we'll talk about the president again going after the fed but like -- >> jp morgan made a lot of money on the curve. >> they did it was good numbers. >> the president is going after the federal reserve again as you saw over the weekend in a tweet he said if the fed had done it's job properly, which it has not, the stock market would have been up 5 to 10,000 additional points and gdp would have been over 4% with no

inflation. quantitative tightening was a killer should have done the exact opposite over the weekend draghi expressed his concerns saying a loss of its autonomy could undermine credibility. kudlow is saying that he's looking to disrupt i think there's an element where david don't you think, a little showtime here? >> yeah. >> honestly. >> but i find the numbers, really 4% gdp growth what was 5 to 10,000 points. the dow, he's still stuck on the dow. >> but yes a lot of people didn't think it

in retrospekt was that good. >> he digit have a problem with it right now. >> he wasn't particularly impressed with it either but 5 to 10,000 points come on. >> if he were an analyst on wall street and he came here and sat there we would say -- huh? he would do -- >> this is by the way -- >> you wouldn't even say anything. >> where goldman says that multiples -- approaches to multiples suggest that we're trading right now somewhere in the 80th to 98th percentile over the last 40 years. look do i find the president's rants troubling? there's a bit of hyperbole to

the man. >> really? a bit. >> just a bit. >> i'm trying to be a diplomat. >> but what about independence can he continue to -- >> that's a good piece. >> when does it start to become a big problem. >> when he quits >> he's not quitting. >> i think the president got the wrong guy. this is a guy that is doing his job. he's adjusted to doing his job what does the president want him to do? roll back the hype and embrace the president's picks for the reserve board and it's not going to happen. >> by the way the president in years past complained about the policies of low interest flooding the market with dollars. it has to stop or we'll face record inflation as they say there's always a tweet. >> he has been a critic of pretty much everybody other than

himself which is broad and people who come on fox and say that he's great. and you're not going to -- its not the job to say we have the greatest president, i love it. i follow him on twitter. it's a blast what does he want him to say i'm hurt by this stop attacking my family what does he -- he hasn't done that yet but honestly, what is he supposed to do he just ignores it and does his job and that's the most effective thing to do. this is not comey. powell is not comey. >> if his job dove tails with what the president wants how are we to know what it was him doing his job or him buckling to the white house? this is the problem. >> well, the numbers were pretty bad. >> the president didn't like the way the market dropped in december >> we're doing fine now. >> he likes to rant. >> no kidding. >> he's got this guy that's a

pinata j.pow is not going to fight back he's an upstanding member of the banking community. he's not some guy that used to come on tv in a four box he was never a four box guy and on the left we have a guy that's human. >> as greenspan told us on friday, he doesn't think much about what other people think about the fed as long as the fed doesn't respond. >> i agree. >> by the way, you saw the president's tweet about boeing as well. >> yes. >> no product has suffered like this one how it needs a rebrand. >> it's an image issue i like the very end of it. what do i know >> i kind of like that that's a cocktail party thing. i told him it was, listen, they solved the health first. >> it's the first passive aggressive president. >> passive aggressive. >> he could get a divorce from the media.

>> he's good at it he likes to comment on things. he's a commenter it's interesting the boeing comment. he didn't call for his head. >> is that next? >> see what they had to say about him? loves him. >> loves him he's a great president next thing you know, they'll be taking over. >> wait until abe starts saying nice things about the president. >> it's just incredible. it's just remarkable his report with the north korean leader is superb what does he say about his enemies? how is his report with nancy pelosi >> no. that's where we're at. >> you're on tv and you just said that. >> i am. >> you're on tv and you said he has a better relationship with

north korea? >> you did i just agreed. >> when we come back, speaking of which, of the smartphone industry, apple and qualcomm getting ready to face-off in federal court. it's an interview you don't want to miss. hear his thoughts on trade, global growth and more s&p, nas highest since october third. three straight weeks of gains but futures are pretty steady. we're back just a minute. every day, visionaries are creating the future. so, every day, we put our latest technology and unrivaled network to work. the united states postal service makes more e-commerce deliveries to homes than anyone else in the country. is it to carry cargo... greatness of an suv? or to carry on a legacy? its show of strength... or its sign of intelligence? in crossing harsh terrain... or breaking new ground? this is the mercedes-benz suv family.

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>> they're not paying qualcomm and that amounted to billions in unpaid licensed fees for the use of the chip but we have gone back and forth you and i have covered this. we have done so many interviews with both parties and spoken to them it's hard to get a sense

is there a possibility of a settlement on courthouse steps to get jury selection today? you have opening statements as soon as tomorrow, i suppose. i still hear there is the possibility of a settle. but we'll have to see. >> my interview with tim cook where tim basically said, these guys are not to be trusted we're not going to deal with these guys it was a six year lawsuit where i certainly din see it coming and it's always possible for anything that was 24 hours after i said it neither side knows what the other side might come with at the last minute. there's no love lost but there's no love lost between anyone in litigation. >> no, there isn't

there's more at stake here for qualcomm for apple, certainly if they were to lose it would be potentially costly to them but it's apple for qualcomm you're talking about the central construct of their business and if they were to lose, not just in terms of whatever -- what might be and whether you'd get damages, who knows, all of those kinds of possibilities but more importantly it would go to the heart of their business everybody would get potentially lowered. i'm not going to speculate but it seems that there's a lot more at stake for them. >> qualcomm's balance sheet. what do you think? >> it puts a lot up in the air they're still waiting to hear from the ftc.

are you really going to have him sort of penalize if not put to the sideline one of the key companies in 5-g so how that all works into it is still clear at this point. >> it's going to come down this has been the most long running, most -- >> it's just ugly. >> nasty. >> it's ugly there's no common ground here. >> no, tim cook and the other guys, who is in charge of fake news >> yeah. >> apple well off the highs of last week.

but setting a nice pace for the year. >> service revenue is stronger. >> we actually have the analyst on the 11 today. >> yes. >> that was on friday was it >> i thought it was a cul-de-sac we're back in a minute oh, sir. that was my grandma's. don't worry, ma'am. all of your stuff is in ok hands. just ok? they don't give two and a half stars to just anybody. here you go.

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four trading days this week. this will be the first and it's our first mad dash >> nokia was downgraded at goldman and they see risks to estimates. why is this important? these are two retail ways to play 5-g and everybody is excited about 5-g but do you know who they're against in terms of competition well, the idea is here they are offering an inexpensive but superior product where the only way it could be blocked is by the president, i believe but the

president has basically, let's say not been as tough on them. it imbedded in the culture and we're all just discovering how imbedded they really are. >> it's an important point there's no u.s. based manufacturer 5- once again, huawei is a very smart company that's underrated by everybody they keep coming in with things that surprise you. >> but they're still not seen as allowed to come into the u.s. market. >> no. >> but plenty of other places

around the world. >> it's inexpensive. that's what people want because everybody is strapped. >> yeah. >> all right we'll keep an eye on nokia and a lot of others as well. come back to those banks more to come from the financials and a lot more to come here from squawk on the street internet that puts you in charge. alright boys, time to eat. that handles anything. [ crowd cheering ] that protects what's important. and reaches everywhere. this is beyond wifi. this is xfi.

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things are so complex you can't even tell what you're getting. >> yeah. >> i don't know. they have to find some way to make it so that you feel the gain because the gain makes you want to spend more. we all heard that from the retailers last week. the tax refund was late. the tax refund, people didn't know if it was that good or not.

you can get free money from the government and not realize. >> i realize that my taxes went up i did realize that being in a high tax state and city where there was no longer the ability to deduct your state and local income tax the only other revenue rates in the entire tax bill. >> that's true but i do think that the -- there was a change in the code. it helped a lot of people that didn't make a lot of money and the retailers are the best way for me to find that but a lot of the retailers, who did the best was the value. lowest end retailers that did well you'd think there was a good tax cut. macy's would do better but it wasn't it was five below that did better a new ceo named at best buy. i think morgan stanley takes

home depot to 210 or somewhere around there. >> i think he'll be terrific i think that culture is a great one. no change there at all so i think home depot has been chronically underrated because they had a terrible february weather was beautiful this weekend believe it or not. this is a weather is beautiful and weekend story in the same way that you need the really nice weekends from black friday. think about it -- this is -- i didn't go to the garden this weekend because there's two more weekends that i fear frost but they were there this weekend >> our mission is to get you to do a gardening book. we think it would sell. >> it's mindful speed gardening. that's what it is about. >> let's get to the opening bell here take a look. it's american eagle outfitters

celebrating it's 25th anniversary over at the nasdaq holding company for first security bank of washington. it really won't get started until tomorrow for b of a but i wonder does goldman city, wells, jp morgan make you hot on what's left >> i think morgan stanley is going to be fabulous because james gorman is a competitive guy and very disappointed in himself with q-4. sometimes whether it be sports or finance, you rally the troops you say that's not going to happen again we're going to put up a number that's going to wow people and i do believe there's an element in chief for all of these guys.

everybody is selling so i like the set up but, you know, i want to see every time i read a piece i say, okay. how much is that going to hurt or how many crops? this crop stuff now? what do you think? you wake up with a trade deal. >> you continue to some people think this could go on until june. it marred the idea of a deal. >> we're softening our own demands for them reducing industrial subsidies waste management spends 4 billion and waste management stock goes up after a crucial downgrade on friday about the chinese not buying our plastic >> the chinese are no longer

ta the recycling they were a huge recipient of so many of them so these recycling plans that some of the cities have or programs that they have are actually not ending up with it. >> a friend of mine is just starting one up in new orleans just starting the recycling program in new orleans can you imagine. >> tough business. >> the sorting is hugely inefficient. very difficult to automate. >> it has been moving up and the base for making plastic still havi being low. >> but to your point, we had a deal in waste. a deal in advertising. a deal in pharma. >> yeah. jean therapy. >> a lot there small but interesting deal >> i thought it was because it was like -- it was like that deal i think it's interesting that

they have been hit over and over again by things not by the market so that company is doing quite poorly do you know who else is doing poorly today allergen there should be no separation chairman and ceo he's on the tape now saying the board deserves no deference. this is not done. >> no, it is not >> they have been kicking around forever. used to be one of the great growth companies and bingo. >> now that's it. >> we would be remiss. >> $37 a share in cash it's about a 45% premium.

>> we have to come back to where you were >> disney up another 1.4% this morning after that gain on friday. >> how is that possible? >> 30 billion in market value. >> you know, between the meeting and our interview it has been very well received >> people still wondering about it you're going to see significant rates of growth in terms of the ability to attract them domestically but grinding it out in the international market where they say 2-thirds of their subscriber base will be for disney plus. it could be more difficult it could be more difficult people pointed to the huge

disparity between the programming cost of a netflix and disney but iger would tell you, he would say we have deeper brands that are going to attract people we don't need to spend as much not to mention that the studio is spending money on movies that will move to the platform. >> that's a big issue for a lot of people. they're spending so much, they're the only one taking it seriously. no one else is taking it seriously. >> the shows that are most associated with people interested in subscribing are stranger things, are grace and frankie, frankie and grace, they're not legacy media brands. >> no, they're not family brands by any means. >> but there's a lot of library viewed on netflix and slowly but surely a lot of that library is going to go away as everybody takes streaming into their own hands and then what is netflix going to be spending in 202 when the disney product is profitable or beginning to be profitable what is their spend going to be.

>> if you had to rate your top two or three reasons why it turned out to be even better than hype, why >> $6.99 is lower than people anticipated and it's a price you can imagine a lot of people say sign me up it was the total addressable market that they identified with the 90 million there hulu at the high end more than people anticipated so those are two of the keys that going in people have been higher in price and a bit lower in total adjustable market. >> this was the most pent upstate of buying that i have seen all waiting for something that i guess they must have thought would be about espn. >> yeah. >> espn losses have not -- >> i know. >> >> they are when we see the directv sub

losses again, what are those going to look like the bulk of cord cutting seems to be done with the direct broadcast satellite companies. another story from friday i wanted to get to guys and follow up a bit more on was our reports about the competition for the purchase of anadarko it's a chevron deal. we said this on friday but i want to update a bit, continues to try to figure this thing out and mull it's options in terms of whether it would be willing to potentially offer it's price to shareholders. but the differential is enormous it was mid 70s 40% of which was going to be

cash and that they were cutoff from a process this last weekend and potentially a bit more as they went up against -- not that they knew who it was but chevron. would chevron have gone up from 65 very much unclear. speaking of people close to the indication indicate to me, 65 may have been the top. by the way, anadarko wanted more chevron stock. there was a willingness on the part of chevron to offer more cash but anadarko wanted more stock and this may be where it broke down in terms of occi's hopes. even with 40% cash, if you do the math, let's assume it's a $76 deal picking one number there from mid 70s you're still talking about them having an issue as much as $23 billion worth of stock off of $49 billion market cap. how would that have traded is a key question they were trying to

understand what would the percentage decline have been for that would they have gotten it? all of these are things they had to think long and hard about but at the same time, saying no to mid 70s i don't know when you might have been able to get a higher offer going into the weekend this thing got announced that was some what unexpected. usually you get a monday announcement or sunday night board meeting done deal, sunday night and monday announcement. >> i think occidental has to do a deal. >> you do? >> exxon has to do a deal and i think that the company that i would say is most likely to get a deal is pioneer natural

resources. scott is a very shareholder conscious gentleman. if they did it, the question is how the stock would have traded. they might have been able to come up to a higher even number in cash but again anadarko did not seem interested. didn't tell them that they were done which i think is making a lot of people sort of wonder what happened. it's going to be the proxy that we get more information. that's going to be awhile. >> bristol meyers closed on friday there's one where it's been

relentless it is by far the cheapest drug stock. you have to believe it's something besides revenue. it went away when iss said vote in favor and basically said no mas they're going to get the deal

he did this deal and a lot of people feel he paid too much i don't think that's the case. a lot of people feel he's very much in trouble with his pbm a lot of people feel that amazon is destroying the front of cvs along it comes downgrading it like almost everybody else it is a ten times earnings stock where a lot of people feel that next year is going to be down. i don't think that's the case but it is part of what's going on with the single payer worry in washington. is the president in favor and nancy pelosi in favor? so can something get done? that's been the problem with united health too. down 12 on friday. it's a very big buy back i think they do the number but it is -- can cvs overcome the downgrade today? i don't think so i'd like to see it obviously i'm talking against my charitable trust but this one is just a show me stock to end all show me stocks

s&p had one down day so far this month. >> good morning, happy monday. a mixed open 3-2 advanced in the declining stocks both weighing on the dow take a look at the sectors a flattish open. banks down a little bit on goldman's some what lighter revenues but not a big sell off. slightly down because of boeing. it's been several issues the fed pivot. friday's numbers were excellent for china and the key thing here is earnings were beating by a wider margin we see this today on our three main stories with goldman, city, and charles schwabb as well.

goldman is down because the revenues were on the light side. you put up the board here for the big earnings movers today but the key story is the earnings continue to do very, very well overall. we have about 31 companies now reporting earnings for the first quarter and generally, it's a much wider number than they're normally starting to see here. historic avenue is 7.5%. so it's very, very large numbers and this includes the goldman numbers today. you want to watch the earnings situation so the bottom line is we're likely going to be positive for the first quarter right now it looks like it's down 2% but they're beating by such wide margins it's going to push the earnings estimates into positive territory for the first quarter. one thing that's not positive is trading volumes. i said for weeks now the buys on the floor are bitterly complaining about the terrible volumes. they have been awful you can see these in cities and goldman's numbers. these are revenues from

equities 842 million. the estimate was930 million. that could drag in more money. so we could look at this one of several ways we have a full ipo calendar. pinterest is going to be here at the new york stock exchange. schedule for thursday, 75 million shares of 15 to 17 that's the biggest one of course we also have zoom video. that will be on the nasdaq starting on thursday a lot of anticipation about that a video communication platform and we have half a dozen other companies, smaller companies that are out there that are really opening up

a look at how financial services interacts with data analysis this is one of the companies doing it you see a lot of students on the floor today. down 51 points back to you. >> rick santelli in chicago. good morning to you, rick. >> good morning, carl. >> it's really a big day and a big finish last week for treasuries they pretty much cleared some significant technical resistance if you look at it we're hovering at 255.75. if you consider a year to date chart of two year, far left, you see january 3rd. that low yield close for twos

was 238, we cleared it for 10s it was 255.5 cleared it on friday but we have come back a couple of bases points we're sitting on that level with tens right now let's look at that day of 30s. they lead the way on this. you see on the left side 290 here we hover 7 basis points above that level so it started with the long end and moved forward. important to be cognizant of that especially today the two year and three year have been firmer where you see a bit of a flattening here it wasn't a curved function as much as it was the following chart. here's one week of tens against s&p 500 and we know that there was divergence equities were looking good yields weren't moving up much.

they are really pairing up here. we want to continue to watch them on a closing yield basis. finally the dollar index yes it's down a bit and yes we lost the 97 handle but as i have talked about and most research pointed to if you open the chart up for one year last april we popped up a bit and once it popped up we have been in a tight zone at lofty levels back to you. >> all right thank you very much. as we go to break, shares of canadian cannabis company aphria getting hammered after swinging to a loss in q-3 the chairman and founder is going to join us later on. also don't miss the exclusive with the governor of the bank of japan. kuroda will talk with her this morning. dow is down 58 points to start this week. we're back after a break measure up?

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let's get to cramer, stock tra trading. >> one of my favorite retailers is ulta. that had a fantastic quarter it has been going straight up.

again, represents a great bargain. and jpmorgan talkinging about 345 price target of 390, taking share. ulta and estee lauder, two stars this year. and i think ulta is not going up that was quite a quarter that was a really great quarter, doing great, back and front. they have a loyalty program, probably the biggest in the country. can you imagine? for $1200 you get a lot of different things including birthday presents. >> never been, probably never will go, but you have been a supporter of ulta for a long time and -- >> multiple ultas. >> very profitable trade. >> terrific. >> best s&p 500 since the crisis. >> it is well run. they have the best brands. they have the best values and best loyalty program you check out the loyalty program, david, you will never shop anywhere else >> for what would i get there? >> so limited. >> i know. >> yeah. >> okay. >> what's on "mad" tonight

>> chevron how do you like that talk about what they're going to do with anadarko and sean connolly, amazing analyst meeting last week, talked about how to reach younger consumers. says, listen, it is not the baby boomers. i sat there thinking, we're a disgusting cohort now. they don't want us. >> the baby boomers. >> they have given up on us. it is like if we eat it, they don't want it. it is unbelievable like we don't -- no boomers allowed! this whole isaisle in the supermarket, boomers not allowed. >> there is over 300 different varieties of yogurt. yogurt. >> i'm not allowed in that aisle. that's a millennial aisle. i'm allowed in the soup, the pears. wherever there is canned corn syrup, i am there. >> sugary cereals.

>> unbelievable i like cheese whiz so much it has cheese in it. >> it does >> many people are concerned, cheese whiz does have cheese. >> okay. "mad money" 6:00 p.m. eastern tonight. when we come back, sara's exclusive with the bank of japan's haruhiko kuroda. don't go away.

♪ good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber. dow getting pinched a bit by boeing and goldman as goldman has numbers out to the, beat on the topline, but miss on revenue. road map begins with big bank earnings citi and goldman reporting a drop in revenue. a closer look at the numbers >> plus, aphria shares plummet we'll speak with the chairman and interim ceo irwin simon about the company's quarter and the outlook for the cannabis industry. >> and an exclusive with the bank of japan governor, his take on the world economy, interest rates and, yes, of course, guys, the japanese yen >> as we said, the lead this

morning, citi and goldman out with earnings today. shares of goldman are sinking. wilfred frost is at hq >> good morning. banks trading lower, despite eps beats for both citi and goldman sachs, giving up some of friday's significant gains for the group excluding wells fargo, of course. while there were some flattering aspects for both companies eps beats such as a lower tax rate than expected for citi and lower compensation expense for goldman which may not be repeated, it is unclear why that should knock the entire group today, other than investors questioning whether this sector is the right place to be late in the economic cycle. both companies today had strong investment banking performance $1.8 billion for goldman sachs trading also continued a theme of being less bad than feared. and for once fixed income the better place to be this quarter compared to equities which relatively speaking helped goldman sachs and citi more than

some rivals. but for goldman sachs, there were misses elsewhere in investment management and le lending. citi's results solid overall, no major red flags in the core retail business that should put it in the wells fargo cap from friday, needing to cut guidance for macro reasons for the year ahead. back to goldman sachs, here is david solomon, ceo, on client activity levels. >> in terms of market activity, and client engagement, we saw significant pickup in the second half of the quarter. and, you know, given the environment that we're in, you know, that pickup certainly continued. i preface it is only two weeks into the quarter, so it is hard to take any forward judgment on that but i think that that activity level certainly improved me meaningfully in the second half of the quarter >> the gold monday call ongoing, the citi call starting now shares trading lower for goldman and citi as well as morgan stanley and bank of america who are still to report in the next couple of days

guys >> i saw a headline saying they had a plan to improve thick results over time. any more specific than that? >> well, they did talk a lot about the new trading platform marquis as well and other initiatives across the board, whether it is thick trading which was decent enough this quarter, the broader trading environment aspects like the apple card, and markers. and the general theme is that they're very optimistic about the strategic changes they're making at the bank on the new management, but it is taking time to shake those things out and clearly this culture itself with a couple of misses, like investment lending and investment management, meaning they're selling off a little bit today. the other positive on 1 mdb, they didn't have to provide any more for that this quarter, maintaining what they said last quarter, they feel like they fully provided on the financial side for that. but, again, lack of certainty there until that is tidied up.

>> when they talk about client engagement what do we think they're talking about? there was a time when hedge funds would come to them to structure products at very high margins. not sure that's what they're talking about. what is the focus of that comment? >> i think he was broadly addressing trading there and the point being that as i said at the top, trading wasn't as bad as it could have been also $1.8 billion revenue in the fixed income trading is pretty impressive it is lower than it used to be five to ten years ago, not too bad, the sense it might be stabilizing. the important thing for goldman, though, is on both the m&a and ip oxs, m&a is strong something that lagged over last seven years, we saw that one big deal last quarter suggested there could be some more to come, but on the ipo side, which they have done well on of late, the shutdown and the soft market

environment pushed a lot of the ipos from q 1 to q 2 and will lead on a number of big tech ipos this quarter. they are a shareholder in uber that could be profitable in the quarter ahead. we'll see which other ipos they might be hinting at. >> thanks. will fred fro willfred frost at hq watching the banks. is the rally going to hold joining us today, david rosenberg chief strategist at chef, jerry banister at stifle good to see you both good morning neither of you have been particularly bullish going into the earnings season, but, barry, does any of the results we have gotten so far ratify your point of view? >> it just started we're fully $6 below the consensus at 159 in earnings this year. the street at 165.

the tech earnings largely fall short in our model, particularly the middle quarters of this year and then we're looking for disappointment on the energy side but it is mostly tech. and a little over 18 times trailing and little over 17 times forward, the market is priced pretty much to perfection and that's just a function of very low real rates and rates below neutral which is extraordinary. >> david, you kept this call going and bond yields have pushed away from those seemingly scary low levels so is the market telling us the opposite is happening? >> i think that with the market has told you this year is that a lot of the event risk that was causing the meltdown in the fourth quarter have subsided so not so much about the economy but, you know, brexit looks like that hard exit has been kicked

downed road. risk that the fed was going to make a big policy mistake, well, that has been alleviated in the last few months of 2018, donald trump was calling himself the tariff man and now we're weeks away from a trade deal with china so actually we have just basically taken event risk off the table for the time being you know, if this was an earnings driven rally in the stock market, i would say, yes, sara, absolutely completely wrong on this call, earnings are doing fantastic but it has been purely and solely a multiple driven story and actually we're now pressing against 17 on forward multiples, which is where we were in september, you knew what to do back then at these levels of valuation. i think this is a momentum sentiment rally. you can say to me, well, the bond yields are off the lowest levels of a few weeks ago, but then again, we're still considerably below where we were last fall.

so has the market action dictated my view on the economy, the answer is no no more than when we hit the highs on october of 2007 when i was given the same question as to whether the s&p 500 was kicking off my recession call back then. two months later, we're actually in a recession so i do my own work on the economic outlook and the markets will do what they're going to do. but the answer is no, i haven't changed my call. >> yeah. i mean, we're interested in both but part of what we're interested in is how the market is reacting. earlier in the year, there had been this narrative that managers were burned in december, had not been able to lever up again, a chase going on, does that mean that if we do hit these new highs, that that's naturally a ceiling here >> well, you think about it, the market failed to clear it was starting to clear in december and the fed pushed that back the fed got chicken. and as they retreated, the market bounced back as dave said

on a pe basis, but we do see disappointing earnings this year and we think it will manifest in the middle quarters particularly we're going to be looking at the fact that we have an extraordinary amount of market clearing, never really occurred. and when you think about it, we live in a world every two and a half years with huge dollops of free money and directed lending, all we're doing is going on and on like a drug, with less and less effect. we live in a centrally planned market with central banks acting like splpolitboros >> david, it is not just the fed pivot, we got china stimulus at work now it is ecb, tlkro, is it something you're increasingly unwilling to fight >> well, i mean, look, they are

aimed at a sickening banking sector situation in europe, the fed pivots because of a weakening economic outlook and the pboc and the fiscal policymakers in china, you know, got scared from last year's deleveraging so, look, as i said before, we would have this conversation october of '07 ask me where is the recession, and i would say, well, wait two months, it is coming i'm not going to say it is two months down the road but, you know, the one thing you don't mention about the stock market, all you do is talk about the price. price has been -- you can argue in a big rally obviously, you can say was it a bull market well, some people think so but volume has been in a bear market what you have here is you have a couple of pig farmers selling the s&p 500 back and forth to each other the volume numbers have been atrocio atrocious, you have a very low conviction among the real serioea

serious investors in the world the volumes have actually lagged well behind the pricing, that as we saw in december say big red flag >> i mean, so, barry, are you sayinghis tweet that the dow wo 5,000. i assume he's talking about the dow. 5,000 to 10,000 points higher now if the fed -- he says had done its job properly, what he has been critical of is the rate hike in december and the quantitative tightening. you think there is merit to that idea >> i don't know about the president's ability to judge the level of the stock market. i do agree that the december rate hike was a mistake. the fed has a tendency to do what the futures have already validated, the futures indicated they were accepting of a december rate hike, they went ahead and pulled the trigger i think they unwind that rate hike by the third quarter. but before that happens, i think the market has to test the fed so the market would pull back to the middle quarters, typical of

a sell in may and go away. and come back after labor day. and then we would have our chance to buy at a lower price but insofar as what i'm seeing on the news out of the administration, i think trade has been a bigger issue with them they are goosing the market. we talk of trade deals. but china buying more u.s. goods, we did that with the japanese in the late '80s. it never solved the trade balances because it never gets to the underlying savings investment balances in the world. which are out of kilter. so i think it is mostly just talk at this point i wouldn't read too much into what the white house said. >> david, barry, thank you, guys, appreciate it very much. starting us off on a monday. when we return, we will hear from bank of japan governor haruhiko kuroda, his take on the global economy, the amazon price hikes that happened in japan, negative interest rates and

more that exclusive coming up after the break. and later, cannabis company aphria out with earnings this morning. chairman and interim ceo irwin simon is with us as the stock falls almost 15% ghbat"ilbe the stree wl rit ck

investors very focused now on the impact of a global slowdown in growth i sat down with the governor of the bank of japan haruhiko kuroda, one of most powerful central bankers in the world and

started asking him for his outlook for the japanese economy. listen >> i think the economy has also slightly slowed down partly because of japan's exports to china has become somewhat weak, particularly it related goods. so japan product also has become weak. >> you have been focused on the inflation target, prioritize that for the last few years. but inflation still remains subdued. why is that? >> two factors one, despite very good corporate profit levels, and also despite very strong labor market

situation, unemployment rate is only 2.3%, which is even in japanese context and yet wages are rising somewhat moderate -- modest. there is one factor. another factor is in the last five, six years, labor productivity increase in japan was the highest among the country, higher than the united states, higher than in germany so wage growth certainty grows, but because of labor productivity increase, corporations can manage without raising prices >> i did see that amazon is raising prices in japan for the first time since it's been there. must be some sort of good sign for you. did you see that

>> so i think particularly in the subsector, restaurant, hotels, they are raising prices because they are quite labor intensive. labor intensive sectors finally raising prices so it takes more time than we thought before because we interview the current policy in april 2013 >> six years. >> six years and yet, of course, when we introduce that monetary policy, inflation rate was minus 0.5 it is now at 1%. >> it worked. >> yeah. >> it raises the question, though, if we do global economy face a steeper decline, downturn

or even recession, whether central banks, especially yours, has the policy to play that. >> of course, since our policy rate is minus 0.1%, and ten year jgb rate is around 0%, still we can further reduce -- >> how negative can you go >> japan's interest rate is just minus 0.1% and as you may know, in europe, they are minus 0.5% or minus 0.7% or -- i'm not saying we would do that, but still there is room for reducing long-term interest rates and also there are other ways to make monetary

conditions more accommodative through larger asset sales, asset purchase program and so on and so forth i think there are still some room for further monetary -- at this stage we don't think it is necessary. >> do you worry at all about the long-termer eimplications and effects of having so much accommodation for so long? >> i think major side effect is -- it is impact on the profitability of the banking sector because banks can make profit through the interest rate -- >> crashing them. >> yes it is almost nothing.

>> are you surprised at the value of the dollar yen, given how much easing you've don relative to the fed's normalization and where the ten-year yield is versus the u.s. ten-year yield. the japanese yen hasn't weakened that substantially. >> before we introduce the monetary easing in 2013, yen was overvalued and the last five or six years, yen has stabilized around 110 to 220 or something which is not undervaluation. rather i should say excessive appreciation or overvaluation was corrected. and exchange rate has been quite

stable now, despite -- >> you're satisfied? >> yeah, yeah. >> bank of japan governor haruhiko kuroda, doesn't get much better than having the bank of japan governor comment to me on the valuation of the japanese yen and the important point he made there is he started this whole experiment, super easy accommodative policy, buying basically everything to try to prop up the inflation rate six years ago. at that time, he said, the yen was overvalued, we have corrected that now and we're happy with these levels where it is in the 110 to 120 overall that was the theme of the interview. our policy is working. the inflation rate is moving up. you are starting to see price hikes in places like amazon because they're labor intensive sectors. as far as missing it, the big headline there is we got more room to cut interest rates from here and there is more scope for easier monetary policy or quantitative easing. very much sticking behind that -- those tools and that

framework and its efficacy >> they obviously have long-standing demographic troubles and then the china weakness has been added on top of that. >> which he referenced and later on, i'll play you a clip for closing bell, where we talk specifically about trade. remember, the trade talks are kicking off today in washington with ambassador lighthizer and we talk about the threat that could pose to the japanese economy, especially if the president starts threatening export tariffs on their autos. and what it would mean if the u.s. china trade friction doesn't get solved quickly >> you spent a lot of time there. i've never been to a place where more people are shopping in tokyo in my life. >> you don't feel that. >> you never do in terms of the lack of spending, yeah. >> they also have very good tastes and they have a robust luxury sector and to governor kuroda's point, the economy has done pretty well inflation remains subdued, but corporate investment and corporate profits have been

strong and yet outlook is quite good except for that export sector that is getting hit so there has been a bit of a resurgence but, yeah, they have long-term structural issues they have to deal with. >> demographics being one of the key ones. >> for sure. >> all right, when we come back, it is tax day. we're going to break down the numbers and see who received the biggest breaks and the biggest hikes. take a look at shares of boeing, american and southwest airlines extend the suspension of the max aircraft until august now. and of course the president, well, he weighed in on twitter this morning saying, quote, what do i know about grounding, maybe nothing, but i did become president. heading into retirement you want to follow your passions rather than worry about how to pay for long-term care.

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time for our etf spotlight let's get to dominic chu looking at the weakness in gold today. >> gold prices lower for the third straight day as interest rates worked their way off of those depressed levels over the

last few weeks those higher rates have taken some of the wind out of the sail for gold prices, less attractive as a hedge against inflation the ticker gdx now down for a fourth straight day. it is now around 7% below the recent high set on february 20th on pace for the worst month since august, nearly every stock in the fund is lower on the day so far at least, but some of the biggest miners like barrick gold and newmont mining losing among other names. >> dom, thank you. when we return, jim stewart is with us why he thinks disney still hasn't solved the cord cutting problem, even with its new streaming platform and later, aphria cannabis stock getting crushed today as the company reported weaker than expected results chairman and interim ceo irwin simon will join us later this hour more "squawk on the street" when we come right back

good morning, everybody. i'm sue herera here is your cnbc news update at this hour. secretary of state mike pompeo in columbia on sunday on the final leg of his four nation south american tour which is aimed at pressuring venezuelan leader nicolas maduro. pompeo and the coluombian president visiting a bridge. >> should reject the rule imposed on the venezuelan people including the venezuelan military leadership. the united states will continue to utilize every economic and political means at our disposal to help the venezuelan people. german prosecutors indicted former volkswack kswagen ceo ond and unfair competition

can he do it again that's what people are asking after tiger woods completed one of the biggest comebacks in sports winning his fifth masters on sunday and 2 million bucks, his first major tournament win in 11 years, he now has 15 majors, three behind the all time leader jack nicklaus. such a great event you're up to date. that's the news update this hour david, back downtown to you. >> okay, thank you, sue. shares of disney extendinging their rally this morning, off the highs of the morning, but still up .7% or so. stocks now up about 14%, just over the last two trading days this after upping the ante in the streaming wars, setting to launch disney plus this fall a direct challenge to netflix and ceo bob iger told me the time, well, now is just right. >> can argue what netflix has

done is good for us because they ceded the marketplace to content distribution and presentation. i like launching when we're launching and believe that it is a great time for us. >> with us now, post nine, author of disney war, a while since the war took place, jim stewart is with us, very strong reception for the unveiling of this streaming service they did give us a lot of information, jim and investors seem happy about the price point and the total addressable market as well, one of the key reasons why that stock performed so well in the last few days. >> i think they did an incredible job with that i think they really established this is going to be a must have channel over the top the pricing is very, very attractive to consumers. the growth story is good and the stock, you know, it is up 14% on the news, it is up 30% on the year. it has been a phenomenally, you know, terrific stock this year so let me just say here's the

cloud over this -- here's what worries me just a little bit they have really done a brilliant job of changing the conversation to the growth opportunities, which is going to help boost up the multiple and away from the problem, which is espn, the cable networks and the cord cutting there was nothing about main line espn of this presentation and espn plus, they seem to be conceding at least for now kind of a niche product, maybe 10 million users. that was the big cloud over the disney stock what is happening to the cable revenue stream from espn looking at the last earnings, it was surprisingly good that the cable revenue was very stable, the swift deceleration seemed to have stopped, but longer term that has got to be temporary the very success of this new disney direct to consumer product is going to cause more people to cut the cord or ge

the small bundles from cable which is not going to include espn i have never seen any modelinging that shows espn going direct to consumer that replicates the profits and revenues they have >> it is a very good point it is something that mr. iger and i spent some time on during our interview in terms of discussing it because they are not positioning espn plus in the marketplace as a replacement for espn at least not yet and he said, you know, it is not a failing service. and i asked him, you know when it is. he sort of indicated yes, but not now. your point is an important one that is, you know, we do wonder what is the trajectory going to be like. last quarter they benefitted from the growth in these virtual mvpds, the likes of youtube tv and sling and the others that have been increasing subs. but even that is actually slowing and so it is an interesting point as to what is going on. >> that is something to watch for when earnings come out next month.

and other -- another minor issue here, but i thisnk it is an issue, they will spend a billion dollars on new content that's impressive, but netflix is spending 8 plus billion on new content and they're hiring all the -- they're snatching people away from the disney pulse, the most impressive producers, writers, are moving into the netflix pulse i wonder is $1 billion enough. >> they'll get up to $2.5 billion over time. and there is license fees they're giving up that they would otherwise receive and you got to remember the movie production arm is actually creating a lot of the content that then gets exclusively put into the surface. >> which is positive and they do have an incredible library. i think some people overlooked that, netflix starting from scratch, they do not have the library. i think a big part of the fox assets is they got good library assets there, disney itself has a rich players of content, they can be spewing that out for ever

and a lot of it is timeless in its appeal to, successive generations of young people coming up i think they may have to end up spending more than they realize to keep up with big spenders like amazon and netflix. the other point, though, is their multiple is still a long way from amazon and netflix. there is plenty of room for multiple growth if people are really convinced that they're going to craft this direct to consumer wipeout and the middle man and get the benefit of the doubt. i think they probably deserve the benefit of the doubt but i think people have to recognize there is going to be some tough quarters if not years in the immediate future. >> i know you're a fan of the balance sheet. >> unbelievable. i look at it just recently and i'm, like, they could have, they could easily pay for the -- they have amazing cash flow, they have rock solid balance sheet, they have very little debt, it

is a fortress balance sheet. you couple that with their demonstrator ability and entertainment area, they're like a super strong competitor. >> well, the people at least who make the decisions about buying and selling seem to be looking past the next couple of years to that future you're talking about. >> that's what they had to do with the story i tip my hat to them, they changed the conversation nobody really talking about espn right now. >> jim, we appreciate it thanks for spending a little time with us jim stewart. tax day finally here we're taking a look today at who bottom the biggest tax breaks and biggest tax hikes as a result of the new law. robert frank joins us with the results. >> good morning. it is the first tax day under the new tax code while most americans got a tax cut, there is a huge gap between the winners and the losers the average american got a tax cut of about $1200 in 2018 generally the more you earn, the bigger your tax cut.

the middle earners will see 1.4% gain in after tax income, about 800 bucks. those in the top 5% will see a 3% gain averaging about $14,000. the top 20% got 60% of the bebb f benefits of the tax cut. the biggest losers are the high earners if they live in the high tax states 8% of taxpayers in new york, new jersey, connecticut and california will see tax increases and the higher your income, the more you paid in added taxes. more than half of all of the tax increases in the new tax law will fall on the top 1%. those who earn their money from salaries rather than businesses or pass throughs or investments also got hit the hardest the biggest winners, those are wealthy business owners and investors in low tax states like florida, texas or washington state who also benefitted from the market gains from the corporate tax cut. the biggest losers are the top earners who make their money

from salaries and high tax states like, yep, new york, new jersey, or california. the new tax law was supposed to make filing simpler, and reduce the need for tax preparers, but as of april, more than half of american filers actually used a tax professional, that's about the same as the year before. back to you. >> robert, beneficiaries among the top .01%, not as much hedge funds because they changed that even more, but private equity also, those people are still on the big plus side, aren't they >> yeah, absolutely. certain industries, real estate was just the huge winner, they were exempt from a lot of things that hurt other industries like the exchange in kind proposal, a huge deal for various markets but real estate exempted and anybody who was taking pass through income below certain levels this tax bill, it all depends on

the specifics of who you are, where you live, and how you make your money very complicated but all and all, most of america got a tax cut. >> yep, important to know. robert, thanks so much robert frank as we go to break, best buy announcing cfo corie barry will become the new ceo in june and hubert joly will move to the newly created role of executive chairman shares down about 58 cents or so dow down 55. "squawk on the street" back in a moment

dow is down 78 let's get to the cme group and get the santelli exchange. good morning, rick. >> good morning, carl. i'd like to welcome my first guest of the week, peter bookfar. thanks for joining me today. >> thanks for having me. >> what a fascinating day. we have steve liesman's interview with chicago fed president charlie evans where he talks about modeling and he talks about big famous

economists that have really not been in dove tail with some of the positives in the economy for a while. many economists that are in the monetary -- modern monetary policy and we have mr. kuroda, one of the biggest central banks in the world, japan. very pleased with how well he's done a little over 22,000, 1989 it was 39,000 peter, what's wrong with this picture? >> well, i want to add one more stat since 1989, the japanese top bank stock index is down 80% so we have to understand monetary policy doesn't create economic growth that wouldn't have happened otherwise. it just shifts around the timing it tries to convince people to buy a house today instead of tomorrow buy a car today, instead of tomorrow, to take advantage of these new low interest rates but that growth would have happened anyway and in fact it would have happened more through savings rather than encouraging

excessive borrowing. we're left with too much debt and we're left with a damaged banking system because low rates or zero rates or a flat curve doesn't provide the impetus for a profitable bank. >> all right, now let's grade on a curve here everyone in the world is in the same boat so to speak from a global vantage point and out of all of the ships that we're discussing with regard to central banks and the policies and how they aren't doing what they're supposed to do, we are still better off than most and the global system isn't going to just disappear, isn't there somethingi infor being the cleat shirt in the hamper for capital flows and investors moving forward? >> the real test for the fed is, yes, you give them credit for taking away some of the extraordinary easing relative to other central banks. but will they repeat the errors of these central banks in the next economic downturn

are they just going to cut rates back to zero or are they going to initiate more qe. >> here's the problem, we're all -- >> yes, they do. >> okay, so everybody eases, the globe starts to slow rather dramatically, what should our fed do at that point, peter? >> perpetual easing is no longer accommodative. 30 years of low interest rates in japan is no longer accommodative. it is actually restrictive getting back to my previous point how it strangles the profitability of our banks so cutting rates back to zero in the u.s. would do the same sort of damage to the u.s. banking system and not provide any impetus for further growth also, we have already too much debt, so lowering the cost of money further is not going to be the answer >> i'm going to have to leave it there. we will pick up on this in future fed meetings, of course >> great discussion. >> david faber, back to you. >> thank you, rick santelli. when we come back, irwin

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welcome back to "squawk on the street." a weak start to this holiday trading week. you can see there are near the session lows let's drill down in one of those underperforming groups. industrial stocks. right now names with ranking from just like some of those pushing the sector lower, general electric, union pacific, united continental and take a look at these defense companies also under pressure today, general dynamics, ray theeion. all three stocks trading down about 20% or so from their recent 52 week highs. now i will send it back to you, guys. >> dom chu, thank you. cannabis company falling today. joining us first on cnbc here's chairman and interim ceo irwin simon. welcome. >> thank you. >> you'll have to help us

understand this crazy business. your revenue growth is more than 600% but you swung for a loss. what's going on in the quarter >> it's really early in this whole industry, first of all. secondly, from a loss to a right down of an asset which is a noncash charge, you know, it exactly is not a cash loss. we were talking before, i think what's important is, the industry where it's going is $150 billion industry growth. aphria will grow by the end of 2020. it's early on. don't get nervous. there was another 30 million noncash write down. the thing is some of this stuff is self-inflicted. to prepare our greenhouses for future growth, to be able to, you know, reach our supply, the demand has been tremendous and

just remember, october '17 the market hit in canada where it was legal. no one has ever grown canabus in a greenhouse a million square feet and be able to come out with products that doesn't have mold or other issues with it and that's something that's everybody's in this big earning curve to do. >> you also got into different projects, adjusted gross margin 18%. it was 47% the prior quarter. >> and sarah, that's it. there's a lot of start-up costs that were involved here. there was plants that he we took at a one part of the facility to prepare for our next license. the big thing now is, you know, health canada has given us another license and we have the ability to grow now. we built another facility where we spent over $200 million and the ability to grow in there is tremendous. i got to tell you, i've been doing this now for three and a half months and i am really

excited to see the opportunities at afridaya. >> do you think package goods company have been net cautious in jumping in and if you do, what is it going to take to them to go whole hog? >> this is the first one i've ever missed at the natural organic food show anaheim, california, in march. that over 20% of the companies had either cbd or hemp affiliates or said we will be into that category. as i say, you know, cbd, thc will be an ingredient and a brand, it will be fwreent with regard to health awareness and pain. there's so many generations where the whole cbd area will be apart of in the move forward. >> older americans. >> older americans' pain, older americans' sleep, older americans' anxiety, diet, skin. many, many areas. >> irwin, you do want to come

back to the quarter because you're positive, you're an optimistic guy, we know that. a quarterly loss exceeds 100 million, negative margins, decreased production volumes, regulatory scrutiny given this latin america, what am i missing here and the stock down 14%? >> david, first of all, a lot has happened in the last three months. number one, we went through a review because of the short report. we put together a special committee and came out in a good place. number two, hey, the last time i was on we had a hostile bid and my first day -- >> that is over, right >> that's over. they shortened the bid and that's behind us. there were a two founders and ceo that left the company and here i am. three months later a lot of distractions that happened in this country, i got to tell you something, i walked in here. it's incredible the passionate people -- the people that are in

aphria today and where we're going. we obtained the license for aphria three, four and five and what we have going on at aphria diamond. i can see the growth potential is why i'm optimistic. if we had today's supply for a billion dollars, we could sell a billion dollars. there's not many companies out there that are turn around $400 million or $500 million a sale. >> your stock run up pretty strongly and the report's up over 30%. where would you say your position versus some of the competitors in canada that we talk about and how much overlap is there on competition of actual products? >> so, sarah, as i lay out the 90 day plan and the 120 day plan, listen, we'll be similar to a consumer package good company. it's about being a low cost producer, low cost grower, being able to package product. in the canadian business today, vape and edibles are not even

apart of our products yet. we obtained a license in germany. we acquire hospitals in germany. our international opportunities are tremendous and i have not even had the ability or the time yet to touch on a u.s. strategy where it's over $50 billion in size and i know a little bit about the u.s. market and consumer products in the u.s. market. >> yes, we know you do. irwin simon now the chairman. "squawk alley" starts in a few minutes. don't go away.

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